Life insurance companies commonly employ “post-claim underwriting” if a policyholder dies within the first two years of coverage. 

What is post-claim underwriting? Can life insurance companies use post-claim underwriting to deny my claim? How can a beneficiary contest a claim denied due to what the life insurance company discovered during post-claim underwriting?

Distinguished life insurance lawyer Chad G. Boonswang explains what post-claim underwriting is, how life insurance companies use post-claim underwriting to deny beneficiaries’ claims for material misrepresentation, and what to do if post-claim underwriting results in claim denial.

If the life insurance company won’t pay due to policy rescission for alleged misrepresentation, call us for help. Remember, life insurance companies only make money when they collect premiums and deny claims, so they take any opportunity to unfairly deny valid claims. Don’t take no for an answer! We have gotten many claims like this paid after we investigate. Call us today to discuss your claim.

What is Post-Claim Underwriting in Life Insurance?

“Underwriting” is the term used to describe the process by which a life insurance company calculates the risk an applicant for life insurance will die within the coverage term. Risk factors include medical history, current health, lifestyle habits, age, gender, weight, occupation, marital status, criminal history, and zip code. Those at greater risk of dying within the policy term pay more in premiums than those at less risk.

Under a life insurance policy’s incontestability clause, if a policyholder dies in the first two years of coverage the life insurance company has the right to look for false information on their application for life insurance and medical questionnaire. They look for this false information during the process of post-claim underwriting, which takes place after a policyholder dies and their beneficiaries submit their claim along with a copy of a death certificate.

If the life insurance company finds errors or omissions during post-claim underwriting, they rescind coverage for misrepresentation and deny claims for death benefits.

Is Post-Claim Underwriting Legal?

Technically, yes. Some laws have been passed in an attempt to stop it but the reality is that it still happens. State and federal law allow life insurance companies to employ post-claim underwriting to discover mistakes or omissions on a policyholder’s initial application for coverage. If they find false information or omissions, they rescind the policy and deny beneficiaries’ claims for death benefits.

This policy is meant to deter applicants for life insurance coverage from lying on their application to get lower premiums, but in practice, it results in many valid life insurance claims getting denied.

Post-Claim Underwriting in Life Insurance Claim Denials

During the contestability period, life insurance companies deny claims if the policyholder hid or falsified information on their initial application, even if that hidden or false information had nothing to do with the policyholder’s cause of death. 

Life insurance companies discover lies, mistakes, and omissions by performing post-claim underwriting, meaning that after a beneficiary files a claim they investigate the truth of the policyholder’s initial submissions. 

How Life Insurance Companies Do Post-Claim Underwriting

When a policyholder dies within the contestability period, the life insurance company reviews their application and medical questionnaire for any indication of misrepresentation. Often the information recorded on the death certificate reveals instances of misrepresentation, such as:

  • Failing to disclose smoking habit: dies of lung cancer from smoking
  • Failing to disclose heavy alcohol use: dies of cirrhosis of the liver
  • Fails to disclose dangerous sports: dies from a fall while rock climbing
  • Fails to disclose marijuana use: dies with marijuana in system
  • Fails to disclose high blood pressure: dies of heart attack or stroke
  • Lying about age: age younger on application than on death certificate
  • Lying about marital status: listed as “single” on death certificate

How to Protect Yourself Against Post-Claim Underwriting

An experienced life insurance attorney can help you get your payout in many instances of alleged misrepresentation. For example, the life insurance lawyers at Boonswang Law have gotten beneficiaries paid on denied claims after we investigated and found:

  • the policyholder made an innocent mistake without the intent to defraud the life insurance company;
  • the policyholder was unaware of the underlying condition that caused their death;
  • the life insurance agent made the mistake or omitted information;
  • the life insurance company or agent failed to question further when there were clear indications of a health condition;
  • a question on the application or medical questionnaire was confusing or ambiguous.

In many cases, we get our client paid in full. In others, we are able to settle for the amount of the death benefit minus what the policyholder would have paid in premiums had the life insurance company written the policy knowing the policyholder’s true condition.

Talk with a Life Insurance Lawyer About Your Claim Denial

Unfortunately, many valid life insurance claims get denied due to alleged misrepresentation. Luckily, there is growing awareness of life insurance companies’ practice of denying claims when they find any indication of possible fraud during post-claim underwriting. 

If your life insurance claim was denied due to policy rescission after post-claim underwriting, call us today for your free, no-obligation case review. We  appeal your denied life insurance claim or sue the life insurance company and get you paid if at all possible.