Protect Your Family’s Financial Future and Legal Rights
Life insurance claim denials can devastate families during their most vulnerable moments. When insurance companies refuse to pay valid claims, beneficiaries can face financial hardship alongside their emotional grief. This article from Allen Carpenter PLC explains common reasons for life insurance claim denials, your legal rights, and steps to challenge wrongful denials to secure the benefits your loved one intended for you.
Watch: Attorney Fletcher Carpenter Explains Life Insurance Claim Denials
In this video: Our attorney explains the most common reasons life insurance companies deny claims, legal time limits that protect policyholders, and how third-party ownership issues can complicate claim payments.
Common Reasons Life Insurance Claims Are Denied
Alleged Non Disclosure of Medical History in Applications
Life insurance companies frequently deny claims citing undisclosed medical conditions in the original application, including:
- Smoking history that wasn’t properly disclosed
- Substance abuse or addiction not revealed during underwriting
- Pre-existing medical conditions omitted from health questionnaires
- Prescription medication use not disclosed to insurers
Important: Most states have strict incontestability periods that limit how long insurance companies can investigate and deny claims based on application discrepancies. These time limits typically range from 1-2 years after the policy takes effect.
Beneficiary Disputes and Third-Party Ownership Issues
Insurance companies may deny claims when they cannot determine the rightful beneficiary, particularly in cases involving:
- Disputed beneficiary designations with multiple claimants
- Third-party owned policies purchased by investors
- Estate planning conflicts between wills and policy designations
- Viatical settlements that weren’t properly executed
What Are Viatical Settlements?
Viatical settlements began in the 1980s as a way for terminally ill patients to access life insurance proceeds while still alive. These arrangements allow patients to sell their life insurance policies to investors to fund experimental treatments not covered by health insurance.
Arizona’s Strict Viatical Settlement Rules
In Arizona, viatical settlements must follow specific legal requirements:
- Investors cannot instruct someone to obtain life insurance for investment purposes
- Proper legal channels must be followed for valid third-party purchases
- Violations result in investors losing their investment and proceeds going to the deceased’s heirs
- Estate planning documents control when viatical settlements are invalidated
Actions to Take if Your Life Insurance Claim Was Denied
Know Your Policy’s Incontestability Protection
Check your policy’s incontestability clause immediately. Most life insurance policies become “incontestable” after 1-2 years, meaning:
- Insurance companies cannot deny claims based on application errors after this period
- The timing of the original application and death date determines contestability
- Policies beyond the incontestability period have stronger legal protections
Collect Evidence for Your Case
Collect and organize all relevant documents:
- Original life insurance policy and all amendments
- Premium payment records showing the policy was current
- Beneficiary designation forms and any updates
- Medical records from the application process
- Death certificate and cause of death documentation
- All correspondence with the insurance company
Fight Back Against Wrongful Denials
Life insurance beneficiaries have significant legal protections, including:
Bad Faith Insurance Practices
Insurance companies that wrongfully deny valid claims may be liable for:
- Punitive damages beyond the policy amount
- Attorney fees and litigation costs
- Emotional distress damages
- Interest on delayed benefit payments
Time Limits for Legal Action
- Statute of limitations varies by state but 2 years is common
- Prompt action is essential to preserve your legal rights
- Early legal consultation can prevent costly mistakes
What You Can Recover in a Life Insurance Lawsuit
Successful life insurance claim litigation may result in:
- Full policy benefits plus accumulated interest
- Punitive damages for bad faith insurance practices
- Emotional distress compensation
- Lost investment income from delayed payments
Why Choose Allen Carpenter for Your Life Insurance Dispute
Our experienced life insurance attorneys provide:
- Free initial consultations to evaluate your case
- Comprehensive policy review and denial analysis
- Aggressive negotiation with insurance companies
- Litigation experience in complex life insurance disputes
- Contingency fee representation (no fees unless we win)
We thoroughly investigate:
- Insurance company compliance with state regulations
- Policy application and underwriting procedures
- Medical evidence supporting or contradicting denials
- Bad faith practices and unreasonable claim handling
- Third-party ownership and viatical settlement validity
Get Your Free Life Insurance Claim Consultation
If your life insurance claim has been denied, time is critical. Our attorneys understand the financial and emotional stress of claim denials and work aggressively to secure the benefits your family deserves.
Call Allen Carpenter today at (480) 808-5075 to discuss your case and explore your legal options for challenging wrongful life insurance claim denials.
About Allen Carpenter PLC
Allen Carpenter PLC is a premier Arizona-based law firm specializing in insurance disputes and bad faith claims. Attorneys Brian Allen and Fletcher Carpenter have recovered millions of dollars for clients in life insurance claim denials, with particular expertise in complex beneficiary disputes and third-party ownership issues.
Last Updated: July 30, 2025