Can a life insurance company deny a claim in the US?
Yes, on limited grounds. The most common are material misrepresentation on the application, death by suicide within the policy's exclusion period (usually two years), or death within the two-year contestability period where the insurer investigates for fraud. After the contestability period, denials are much harder to justify.
What is the contestability period for life insurance?
Under state insurance law, the insurer can contest and rescind a policy for material misrepresentation within the first two years. After two years, the policy is generally incontestable and can only be challenged for outright fraud in most states.
Does the insurer owe interest on a delayed death benefit?
Yes. Most states require insurers to pay interest on death benefits that are not paid within a statutory period (often 30 days after proof of death). If the insurer denies or delays in bad faith, you may also recover extra-contractual and punitive damages under state bad-faith law.
What happens to a policy loan when the insured dies?
Any outstanding loan against the policy's cash value, plus accrued interest and unpaid premiums, is subtracted from the death benefit. The beneficiary receives the reduced net amount.