Life Insurance Rescission After Reinstatement: How Insurers Use the Contestability Period to Deny Claims
When a family files a life insurance claim, they rarely expect to hear the word “rescission.” Yet life insurance rescission is one of the most common—and most devastating—reasons insurers deny claims, especially when a policy lapsed and was later reinstated.
Across the country, insurers routinely deny claims by arguing that something on a reinstatement application was inaccurate, incomplete, or “material.” Often, the alleged issue has nothing to do with the cause of death. Instead, insurers point to past medical history, driving records, or criminal disclosures—then rescind the policy retroactively and refuse to pay benefits.
If your life insurance claim was denied after reinstatement, call 1-888-510-2212 for a FREE consultation with a life insurance lawyer before accepting the insurer’s explanation.
What Is Life Insurance Rescission?
Life insurance rescission means the insurance company treats the policy as if it never existed at all. When a policy is rescinded:
No death benefit is paid
The policy is declared void ab initio (from the beginning)
Insurers typically offer to refund limited premiums
Beneficiaries are left with nothing
Rescission is far more severe than a standard denial. And it most often arises during the contestability period.
Understanding the Contestability Period
Most life insurance policies include a contestability period, usually two years, during which the insurer may investigate and challenge the policy based on alleged misstatements.
During this period, insurers look closely at:
The original application
Any reinstatement application after lapse
Medical, prescription, driving, and criminal records
If the insurer claims it would not have issued or reinstated the policy had it known the “true facts,” it may attempt rescission—even after the insured has died.
📞 If your claim was denied during the contestability period, call 1-888-510-2212 now for a FREE consultation.
Why Reinstatement Applications Are Risky
Many policyholders believe reinstating a policy is a simple administrative step. In reality, reinstatement applications are underwriting events, often treated the same as a brand-new application.
Common pitfalls include:
Health questions answered from memory
Failure to disclose recent diagnoses or medications
Overlooking driving history (DUI/DWI)
Assuming “old” issues are irrelevant
Insurers frequently argue that any misstatement on a reinstatement application resets the contestability clock, giving them a new opportunity to rescind.
Material Misrepresentation: The Insurer’s Favorite Weapon
To rescind a policy, insurers usually argue material misrepresentation.
A material misrepresentation is a statement that:
Was false or incomplete, and
Would have caused the insurer to decline or change coverage if known
Importantly:
The misstatement does not need to be intentional in many states
It does not need to relate to the cause of death
It can involve non-medical issues, like driving records
This is where DUI-related denials often arise.
DUI Denials and Life Insurance Rescission
Driving history—especially DUI/DWI convictions—is heavily scrutinized during underwriting and reinstatement.
Insurers may rescind policies based on:
Failure to disclose a recent DUI
Incorrect dates of convictions
License suspension or revocation
Multiple alcohol-related offenses
Even when death is caused by an accident unrelated to alcohol, insurers often argue that a DUI misrepresentation increased underwriting risk, justifying rescission. DUI-related rescission is one of the most frequently litigated grounds for rescission in life insurance cases If DUI history is mentioned in your denial letter, call 1-888-510-2212 for a FREE consultation immediately.
Federal Court Guidance on Reinstatement Rescission: Ferguson v. Brighthouse Life
A recent federal case illustrates how insurers approach rescission after reinstatement. In Ferguson v. MetLife Investors USA Insurance Co. (Brighthouse Life), a Michigan federal court upheld rescission after the insurer discovered undisclosed DUI convictions on a reinstatement application. The court ruled that:
The policy had lapsed and required reinstatement
The insured made a material misrepresentation about DUI history
The insurer’s underwriting rules required denial if disclosed
The policy could be rescinded during the contestability period
The beneficiary argued fairness—but the court enforced the policy language as written. This case shows why insurers feel emboldened to rescind—but it does not mean every rescission is lawful.
Why Many Life Insurance Rescissions Are Wrongful
While insurers often cite cases like Ferguson, many rescissions fail under closer legal review.
Common problems include:
Vague or ambiguous application questions
Insurer access to records before death
Acceptance of premiums after discovering issues
Waiver or estoppel defenses
Underwriting inconsistencies
Failure to prove true “materiality”
Insurers may deny claims hoping beneficiaries won’t fight back.
Before accepting a rescission, call 1-888-510-2212 for a FREE consultation.
Warning Signs of a Problematic Rescission
You should seek legal review if:
The policy was reinstated before death
The alleged misrepresentation seems minor or outdated
The insurer cites DUI, medications, or medical records
Premiums were accepted after reinstatement
The death was unrelated to the alleged issue
The denial letter references “void ab initio”
These cases often turn on fine details buried in policy language and underwriting files.
What Insurers Don’t Tell Beneficiaries
Insurers rarely explain that:
Rescission is discretionary, not automatic
Courts scrutinize underwriting practices closely
Insurers bear the burden of proving materiality
Denials during contestability are frequently challenged
Many rescinded claims settle after legal action begins
👉 A denial letter is not the final word. It’s an opening position.
What to Do If Your Life Insurance Claim Was Rescinded
Step 1: Do Not Accept the Refund Automatically
Accepting a refund may weaken your claim.
Step 2: Preserve Everything
Keep:
Policy documents
Reinstatement application
Denial letter
Premium payment records
Step 3: Act Quickly
Deadlines apply. Delay can cost leverage.
Step 4: Speak With a Life Insurance Lawyer
Rescission cases are technical and evidence-driven.
Call 1-888-510-2212 now for a FREE consultation with a life insurance lawyer.
Denied After Reinstatement? Here’s What to Do Next
If your claim was denied based on:
life insurance rescission
reinstatement application issues
contestability period investigations
material misrepresentation allegations
DUI-related underwriting decisions
You may still be entitled to benefits. Call 1-888-510-2212 today for a FREE consultation with a life insurance lawyer before deadlines expire.
