Understanding Material Misrepresentation in Life Insurance Policies

Material misrepresentation is a common reason insurance companies cite for denying life insurance claims. It occurs when the insurer believes the policyholder provided false, incomplete, or misleading information on the application, and that this information influenced the company’s decision to issue the policy. While this might sound straightforward, determining whether a misrepresentation is “material” often involves complex legal and factual questions. If you’re a beneficiary dealing with a claim denial based on alleged misrepresentation, understanding what this term means and how to respond can help you protect your rights and potentially recover the benefits you’re entitled to. In this blog, we’ll explain material misrepresentation, how it can impact a claim, and what you can do to challenge the insurer’s decision.

What Is Material Misrepresentation?

In the context of life insurance, “material misrepresentation” refers to a false statement or omission on the policyholder’s application that significantly affected the insurer’s decision to provide coverage. A statement is considered “material” if the insurance company would not have issued the policy, or would have issued it on different terms, had it known the true facts. Examples of material misrepresentation include:

• Failing to disclose a pre-existing medical condition, such as diabetes or heart disease
• Understating the use of tobacco or other substances
• Omitting treatments or hospitalizations from medical history
• Misrepresenting occupational risks or dangerous hobbies

Insurers rely on the information provided by applicants to determine risk and set premiums. If they later discover inaccuracies, they may claim that the policy was issued based on false information and deny the claim.

When Can Insurers Deny Claims for Misrepresentation?

Insurers can deny a life insurance claim for material misrepresentation under certain conditions, particularly if the misrepresentation is discovered during the contestability period. This is typically the first two years after the policy is issued. During this period, insurers have the right to closely review the policyholder’s application and investigate claims for inaccuracies.

After the contestability period, insurers generally cannot deny a claim for non-fraudulent misstatements. However, if they allege that the misrepresentation was intentional or fraudulent, they may still try to deny the claim. In these cases, the insurer must provide evidence that the policyholder knowingly made false statements with the intent to deceive.

Challenging a Denial Based on Material Misrepresentation

Being told that a claim is denied due to misrepresentation can be distressing, but it’s important to remember that not all denials are final. Beneficiaries have the right to challenge the insurer’s decision. Some steps to consider include:

1. Review the Denial Letter

Start by carefully reading the denial letter to understand the insurer’s reasoning. The letter should outline the specific misrepresentation that led to the denial and explain why the insurer believes it is material. Identifying the insurer’s argument will help you prepare your response.

2. Gather Supporting Documents

Collect all relevant documents, including:

• A copy of the life insurance application
• The original policy and any riders or amendments
• Medical records and doctor’s notes
• Evidence of the policyholder’s full disclosure (if available)

These records can help you determine whether the alleged misrepresentation was truly material and whether the insurer’s claim is justified.

3. Consult an Experienced Life Insurance Attorney

Challenging a denial based on material misrepresentation often involves complex legal arguments. An attorney who specializes in life insurance disputes can review the insurer’s claims, identify weaknesses in their case, and help you present evidence that supports your position. With legal assistance, you may be able to negotiate with the insurer, file an appeal, or even take the case to court if necessary.

4. Provide Additional Evidence

In some cases, the denial is based on incomplete or outdated information. Providing updated medical records, additional testimony from doctors, or other relevant documents can help demonstrate that the policyholder did not intentionally misrepresent their health or other factors. This evidence can make it harder for the insurer to justify their denial.

5. File a Complaint or Lawsuit

If the insurer refuses to reverse the denial, consider filing a complaint with your state’s insurance department or pursuing legal action. In Florida, for example, the Department of Financial Services can investigate complaints and help ensure that insurers comply with state regulations. A lawsuit may be the last resort, but it can compel the insurer to provide a detailed explanation of their decision and produce evidence to support their claims.

Understanding Your Rights as a Beneficiary

As a beneficiary, you have rights under state and federal law that protect you from unjust claim denials. These rights include:

• The right to a clear and detailed explanation of why a claim was denied
• The right to appeal the insurer’s decision and present new evidence
• The right to seek legal representation to challenge the denial
• The right to file a complaint with the state insurance department if the denial appears to be in bad faith

By asserting your rights and working with a qualified attorney, you can often overcome a denial based on material misrepresentation and secure the benefits you’re entitled to.

Get Help With Your Denied Life Insurance Claim

If your life insurance claim was denied due to material misrepresentation, it’s essential to take action quickly. With the right evidence and legal support, you can challenge the denial and fight for the benefits your loved one intended for you. Contact the Law Offices of Jason Turchin today for a free consultation. Our experienced team can review your case, help you gather the necessary documentation, and guide you through the process to protect your rights and recover the benefits you deserve.