When would My Life Insurance NOT Pay Out?
Last updated on March 3rd, 2022
Life insurance is an excellent way of making sure that your beneficiaries get money when you pass away. This money can be quite the sum, depending on the policy in question. That is why some people try to abuse insurance policies. To combat abuse, insurers set rules in place to make sure that the policies are paid out properly.
7 Situations When Life Insurance will NOT Pay Out
The benefits of life insurance usually get paid out when the insured party dies. However, some instances will allow the insurer to hold on to the benefit. Here are some of the cases when this happens:
1. The insured dies too soon
If the insured dies within a period after the policy took effect, then the payout can be withheld. It, however, often only results in the delay of the release of the payout.
2. The policy expires
Some life insurance types, like term life insurance, expire after a certain period. If the policy does not get renewed and the insured dies, the insurer will not release the benefit.
3. If the insurer proves fraud
Many people go through unscrupulous means just to get money from insurance companies. These companies are wary of fraud as a result. If the insurer demonstrates that fraud is committed, then the benefit won’t be released.
4. Dishonesty during the application period
There is a specific set of questions that insurers will ask life insurance applicants. Examples include the family history for illnesses, smoking, and others. If the insurer finds dishonesty regarding this, then they can opt not to release the payout.
5. Some causes of death are not considered
Not all causes of death will be regarded as valid by insurance companies. Some specific causes will cause the benefit not to be released. One notable example of this is suicide. Some particular policies will still release money even if suicide is the cause. These exceptions usually vary, so ask your insurer about these.
6. Being outside the country of residence
Some policies will only release the benefit if the insured dies in the country of residence. On the other hand, some policies still cover other countries. Take note of this if you travel outside the country often.
Also, many insurers will surely not pay if the insured dies in certain high-risk countries. Examples of these are countries at war.
7. High-risk activities that cause the insurer’s death
Most insurance companies do not cover high-risk activities as a valid cause of death for releasing the payout. If you are an adrenaline junkie, take note of this exception. Tragic accidents from things like skydiving and other extreme sports will not be covered.
Always Check with Your Insurer
Not all insurance policies have the same exceptions for not paying out. Check the specific life insurance policy that you have to help guide you against the activities that you should try to avoid. Most importantly, make sure that you always keep track of the terms of the policy that you have.
Have you considered switching your life insurance policy? Use our Life Insurance comparison service today.
