Life insurance denials occur when insurance companies decline to pay the death benefit owed to designated beneficiaries after a policyholder’s death. 

A life insurance claim may be denied for various reasons, such as the misrepresentation or non-disclosure of material facts on the insurance application, non-payment of premiums, and exclusions detailed in the policy agreement. Insurers may also deny claims under some circumstances involving fraudulent or negligent misrepresentation and suicide.

Life insurance denials should be reasonable and based on sufficient evidence. Insurance companies must comply with the rules and regulations of common law, the Insurance Act, and the insurance contract. Beneficiaries whose claims are denied may have legal options to challenge the decisions of the Insurance companies and seek appropriate compensation.  

In Estate of Kareem Watson et al v. RBC ( 2021) the Court dealt with the denial of a life insurance claim. The Court examined whether the policyholder’s “outstanding criminal charges were “material to insurance” such that he was required to disclose them during the application process.” The Court concluded that RBC offered no supporting analysis on how the pending criminal charges were material to determining the insured’s eligibility for life insurance or evaluating his insurance risk. The Court ruled in favor of the Estate and ordered RBC to pay $250,000.  

In Coulter v Co-operators Life Insurance Company ( 2014) the insured failed to report his medical history on the Paramedical Plus Form when applying for an increase in existing life insurance coverage. The insured died of cancer and the insurer refused payment of additional coverage, citing non-disclosure on the Form. The beneficiaries of the insured brought a court action against the insurance company. The court held that there was no ambiguity in the Form questions and, if all facts were disclosed, a reasonable insurance company would have postponed the application until medical testing was completed and the results were known. The Court ruled against the beneficiaries, and the action was dismissed.

If death benefits under a life insurance policy have been denied, our legal team can help you receive the compensation you may be entitled to. Call us today, at no cost, to discuss potential next steps.