Life Insurance Claim Denied in Australia? How to Appeal

Australian life insurance — whether held as a standalone policy, through superannuation, or as a group policy through an employer — provides financial protection for families when a loved one passes away or becomes seriously ill or disabled. When a life insurance claim is denied, the impact on bereaved or disabled families can be catastrophic.

This guide explains the most common grounds for life insurance denial in Australia and how to challenge the decision through AFCA and the courts.

Why Australian Life Insurance Claims Are Denied

Non-Disclosure of Medical History

Under the Insurance Contracts Act 1984 (ICA), you have a duty of disclosure when applying for life insurance. You must disclose information that you know, or a reasonable person in your circumstances would know, to be relevant to the insurer's decision.

If the insurer believes material information was not disclosed — a pre-existing medical condition, family history, occupation risk, or lifestyle factor — it may deny the claim and void the policy.

Since 2021, reforms to the ICA have strengthened protections:

• Insurers must ask specific, clear questions (a "targeted duty of disclosure" approach for consumer contracts)
• Consumers are only required to answer questions honestly — they do not need to volunteer unrequested information
• If a question was not asked, the failure to volunteer information generally cannot be used to deny a claim

Policy Exclusion Applies

Common life insurance exclusions in Australia include:

• Suicide within the exclusion period — typically 13 months from inception (no minimum exclusion period is legislatively required, but 13 months is standard)
• Dangerous or hazardous activities — aviation, extreme sports, illegal activities
• War or civil unrest

If the insurer claims an exclusion applies, it must demonstrate that the cause of death falls within the exclusion's wording.

Claim Relates to a Pre-existing Condition

Some life insurance policies exclude death from specific pre-existing conditions for a defined period. If the policy wording excludes certain conditions, and the cause of death falls within that exclusion, the claim will be denied.

Policy Had Lapsed

If premiums were not paid and the policy lapsed before the death, the insurer may deny the claim. Disputes arise where:

• The insurer did not give adequate notice of lapse
• The policyholder was unaware due to illness, incapacity, or administrative error
• A grace period should have applied but was not honoured

Life Insurance Through Superannuation

Millions of Australians hold life insurance (including Total and Permanent Disability (TPD) and income protection) through their superannuation fund. Claims through super-linked insurance are governed by both the insurance policy terms and the trust deed of the superannuation fund.

Disputes involving super-linked insurance can be referred to:

• AFCA (for complaints about the insurer's handling of the claim)
• AFCA's Superannuation Division (for complaints about the superannuation trustee's handling of a claim or benefit determination)

TPD (Total and Permanent Disability) Denials

TPD insurance — which pays a lump sum if you are totally and permanently disabled — is one of the most contested forms of insurance in Australia. Denials typically involve:

• The "own occupation" vs "any occupation" definition — many super-linked TPD policies use an "any occupation" definition, requiring you to be unable to perform any work for which you are reasonably suited by education, training, or experience
• Medical evidence disputes — the insurer may claim your functional limitations do not meet the total and permanent threshold
• Underestimation of non-physical disabilities such as depression, anxiety, chronic pain, or cognitive impairment

How to Appeal a Denied Life Insurance Claim

Step 1: Get the Denial in Writing

Request a formal written denial specifying the exact policy provisions and evidence relied upon.

Step 2: Obtain Clinical Evidence

For death claims, work with your solicitor to obtain all relevant medical records. For TPD or disability claims, gather comprehensive evidence from treating physicians, specialists, and occupational therapists.

Step 3: Internal Appeal

Submit a formal internal appeal to the insurer with supporting evidence. Most insurers provide at least one level of internal review.

Step 4: AFCA Complaint

Lodge a complaint with AFCA at afca.org.au or 1800 931 678. AFCA can:

• Investigate non-disclosure disputes under the ICA framework
• Award up to $1,150,000 in a life insurance benefit dispute
• Direct the insurer to pay claims, reinstate policies, or pay interest on delayed claims

Step 5: Legal Action

For large claims or complex disputes, litigation may be necessary. Specialist life insurance litigation lawyers operate in all Australian states and territories. No-win-no-fee arrangements are available for some life insurance matters.

The ICA's Section 54 Protection

Section 54 of the Insurance Contracts Act can protect policyholders where a claim is denied due to a breach of policy condition that did not cause or contribute to the loss. This is particularly relevant where the insurer alleges a failure to notify or a procedural breach.

Fight Back With ClaimBack

ClaimBack helps Australian families challenge denied life insurance and TPD claims with professional AFCA complaint submissions, evidence frameworks, and structured appeal letters.

Start your life insurance appeal with ClaimBack

Related Reading

• How to Write an Insurance Appeal Letter
• Common Reasons Insurance Claims Are Denied
• How to Use the Insurance Ombudsman