Life Insurance Claim Denials

This is one of the most misunderstood aspects of life insurance and a constant source of animosity and suspicion between consumers and life insurance companies. Consumers think that insurance companies are out to get them, steal their hard earned money for years and then deny their claims over a technicality when the time comes. This is one of those areas where the life insurance industry has failed to educate consumers on the denial process and the misunderstandings that have resulted have come back to hurt their image. In honor of open communication, let me try to take a step towards setting the record straight.
First of all, let's establish what claims a life insurance company can and can't deny. Most state laws prevent insurance companies from denying a claim two years after the policy has been enforce. The only exception to this is if the beneficiary is convicted for intentionally killing the insured and even then the benefits are usually still paid but just to someone else. Within that two year period the life insurance company can deny your claim if you misrepresented anything in the application or underwriting process or if you commit suicide. If you die from a pre-existing condition that they didn't ask about, that you didn't know about or that had never been diagnosed, then the insurance company will still pay.
Another check and balance in the claims process is that each state in the United States has a department of insurance that is there to enforce the laws of that state. These departments of insurance work for the residents of the state and they are there to protect your rights. If there was an evil company out there unfairly denying your benefits, then all you have to do is file a complaint with your department of insurance and they can arbitrate between you and the insurance company to make sure they are upholding the laws of the state and treating you fairly.
So the key to take away from all of this, is to just be honest. If you are honest and forthcoming during the life insurance application process, then you have nothing to worry about. If there is any doubt on an application, then I would recommend erring on the side of more information is better. For example, if they asked if you have used a nicotine product in the past 12 months and you smoked one cigar when you were at a poker party, then I would recommend saying "yes" and then explaining that you don't generally smoke, but you had one cigar at a poker party. Most companies will still treat you as a nonsmoker and you also don't worry about your claim getting denied because you lied about smoking.