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Good advice.

Denied Payment of Life Insurance? Pitfalls to Coverage

DBM Law Blog

Life insurance products vary in price and terms.

Many workers have group policies with term life coverage and never read the terms.

Other individuals, managers or professionals may also purchase wealth achiever plans or other professional group term policies with the assistance of a broker.

Persons with mortgages often purchase life insurance for the balance of the mortgage at the time of purchase with premiums paid as part of the monthly payments.

Despite how common such products are, few people take the time to obtain and read the complete policy terms, or understand the coverage purchased.

In general, life insurance is a contract of utmost good faith.

The BC Insurance Act requires the applicant for insurance to disclose all material facts within their knowledge that are material to the insurability issue.

Partial disclosure does not excuse the applicant from their duty to disclose all material facts known to them.

A material fact is one that would cause a reasonable insurer to either charge a higher premium for a greater risk, or decline to insure the person if such had been disclosed.

What you believe is material does not matter. Materiality is an objective question taken from the point of view of the insurer.

Misrepresentations of material facts in the application forms or during the medical interview and exam, whether fraudulent or innocent, may entitle the insurer to void the contract.

The investigation into what is material and whether a misrepresentation has been made usually only happens after a claim for proceeds has been made.

Therefore, it is very important for the applicant while alive to know and understand that the accuracy of their statements in writing or verbally is vital to ensuring coverage is in place for their beneficiaries and that you are not denied payment of life insurance.

Knowing your medical history is important, and understanding the medical terms used in the application form is essential to ensuring your answers are correct.

Life insurance coverage is most often denied because the application form asked confusing questions that cover numerous medical conditions under various grouped scenarios with terms that may not be known or understood by the applicant.

Even a person that takes the questions to their doctor to help them answer, doctors too may not grasp the technical questions to avoid the traps.

A knowledgeable insurance broker may be of some help, but they too make mistakes in reading the question out to you and filling in the application form for you without you fully reading and understanding the breadth of the questions asked.

To answer without mistakes, you may have to read and re-read the questions, break them apart per item and condition, and answer each one separately before giving your final answer on the form to the single question.

If you are unsure, better to find out or say so than record a wrong answer.

Examples of misrepresentations are:

  • Failing to disclose the correct number of cigarettes smoked;
  • Failing to disclose a medical condition you have been tested for even if no diagnosis made or confirmed;
  • Failing to disclose symptoms of a disorder even where you do not have the disorder;
  • Failing to disclose a treatment even if the condition was mild or cured by it;
  • Failing to report the level of use of medical marijuana.


The mistakes are usually uncovered when all your medical records are reviewed in minute detail against your answers. Any discrepancies such as your doctor noting one detail in their records and you noting it differently on the application form could lead to a problem.

If you as a beneficiary or an estate has been denied payment of life insurance proceeds, it is best to have the matter reviewed by an insurance benefits lawyer right away to know what your rights are to the benefit and your options to challenge the denial. There is a time limit to bringing an action against an insurer so do not delay, call today!


Blog is by Julie Fisher, Associate Counsel at Drysdale Bacon McStravick LLP, for a FREE initial legal consultation, email: or 604-937-6354.


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