Chelsey Tucker graduated with a Bachelor of History degree from Metropolitan State University in 2019. She now writes about insurance with her specialty being life insurance and has been quoted on Help Smart Phone and MEL Magazine.

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Dan Walker graduated with a BS in Administrative Management in 2005 and has been working in his family’s insurance agency, FCI Agency, for 15 years. He is licensed as an agent to write property and casualty insurance, including home, auto, umbrella, and dwelling fire insurance. He’s also been featured on sites like

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Reviewed by Daniel Walker
Licensed Auto Insurance Agent Daniel Walker

UPDATED: Mar 19, 2020

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People negotiating denied life insurance claim

Yes, you can negotiate a denied life insurance claim. You need to understand why this happens, some of the terms you will hear and to know what your rights are when pursuing the death benefit. The advice below will help to negotiate the claim most effectively. To get quick insurance quotes use the free tool on this page now!

When an insurance company has denied a life insurance claim, it can certainly be devastating news. Your loved one’s last wishes were to take care of surviving family members. The very idea that the insurance company is searching for a way not to pay you may infuriate you.

During this stressful time, try to focus on taking progressive steps towards resolving the problem. First, do not act in anger. Take out your frustration by doing something physical and yet practical. (For example, chop firewood or beat up a punching bag.)

Allow yourself time to recover and remain calm. Your next step is to attack the problem using logic and reason.

Why Does This Happen?

First, understand that the only way an insurance company can legally deny a beneficiary’s claim is if the terms of death were not covered by the contract. This may be due to a certain exclusion or special inclusion. The question is: what can you do if the insurance company denies a life insurance claim because of questionable circumstances?

You may even see the insurance company’s reasoning on this. If the terms of death were not stated in the contract, or were excluded, then you are not legally entitled to that money. Still, don’t you deserve something from the insurance company? Don’t you deserve something for your pain, loss and the trust you put into the company?

Unfortunately, if the terms of death are excluded from the contract, there is nothing you can do. The insurance company will never settle for a portion of the payment based on sympathy alone. However, if the contract is regarding a cause of death that wasn’t specifically excluded from the contract, then there may be some room left for appeal.

You may be able to negotiate with the insurance company. Before pursuing this angle, first consider whether or not you can resubmit your claim. Is it possible the insurance company has misunderstood something about the circumstances of the claim? Are they not aware of what precisely was put in the contract? Is it possible an error was made on the application form?

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What is Material Misrepresentation?

Remember that your insurance company must fairly and promptly settle the claim in good faith. You can start the process by making an appeal and by producing documentation that you think makes your case. Otherwise, take careful note of the reason for denial. One of the most common reasons for claim denial is material misrepresentation on the application.

Supposedly, this is a contract item that was falsified since, if it were fully disclosed, the insurance company would surely have passed. For example, what if the person who died hid information about his/her employment, age, lifestyle, hobbies and so on?

In general, insurance companies are highly suspicious of any claim that is filed within two years of the contract signing. Some insurance companies (depending on state law) even have the right to “retroactively reject” an application, if there is any evidence of what we know as material misrepresentation. Now that you know the perspective of the insurance company, let’s consider the process of negotiation.

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Insurance company representatives may come across as arrogant or insensitive in negotiation. This is what they know as the “momentum process.” It is a process designed to discourage the claimant from proceeding on with appeals. They want to make you feel as if you have no reason to fight. If this happens, do not take the bait. Instead, state that you will discuss the details of the claim with a doctor.

This is another important step in negotiation: seeking the advice of an authority figure. Try to get a doctor involved, one who understands why the death took place, and one who could help to explain the situation.

An insurance company will read a doctor’s letter and consider overturning the decision based on his/her authority. If the insurance company agrees to speak with you, make sure you speak with someone who is in a position of authority within the company. Get his or her personal contact number. Avoid agents that have no power.

Your Rights and Options

It might also help to contact your state department of insurance so you can learn just what rights you have, and what you can and should expect from the insurance company. All of these suggestions are for negotiating with the insurance company to overturn your denial and give you the full payout.

What if the insurance company refuses to do so, even after an appeal? Should you negotiate for a portion of the total payout? Most likely not. Most experts recommend that an experienced life insurance claim denial attorney handle the case on behalf of you. Why negotiate for a lesser pay off in the first place? If you made an agreement with the insurance company, and they are not cooperating with the contract, then you should fight for the full amount. Even if they are willing to negotiate with you a lower pay off amount, that just proves they know they could be in legal trouble.

If you have no case against the insurance company, then it’s not practical or even ethical to harass the company for extra money. However, you are entitled to every penny of that life insurance policy if the circumstances so merit. Talk to an attorney if you have any serious doubts as to your case. Most life insurance companies will pay the beneficiary as directed if the case is legitimate. They don’t want a messy court case if they can avoid it. More often than not, they do pay policies as directed and within reasonable time. Do not fear the insurance companies. You always have state law on your side.

If you need to obtain coverage you can use the insurance rate quote tool below to get started comparing life insurance rates now.