When does life insurance not pay out?

The most common reason for a life insurance claim being unsuccessful is due to non-disclosure.

This refers to withholding details or providing misinformation at the point of application.

If upon your death it's deemed the information you provided wasn’t 100% truthful, the life insurance provider has the right to decline a pay out; highlighting the need to be open and honest when arranging cover.

It's a common misconception that life insurance companies will try to find holes within your application as a means of declining a pay out – this is not the case.

The most likely reason non-disclosure will become apparent is if your cause of death was as a result of a pre-existing medical illness you were aware of prior to application but didn’t disclose, or substance misuse you didn’t mention.

Most life insurance policies implement a contestability clause of 12-24 months from application, meaning that if you pass away during this period, your death can be investigated further.

This allows the life insurance provider access to your medical reports and autopsy results to determine if any non-disclosure took place.

Again, this highlights the need to ensure you provide as much truthful, relevant information at the point of application - something our award-winning team can help with.

Some life insurance policies, typically over 50s plans, come with a waiting period.

This is a period of time at the being of the policy (usually 12 or 24 months) where you won't be covered if you pass away due to natural causes, (although all premiums paid to date will be refunded).

You'll still be covered for accidental death during this period.

For life insurance policies implementing a waiting period, passing away due to natural causes during this period of time will result in a claim being declined.

To determine the waiting period on your particular cover, please refer to the terms and conditions of your policy or contact your insurer.

It's possible to arrange life insurance with no waiting period clause.

At Reassured, we arrange policies with a number of different providers offering a variety of waiting periods.

It's often questioned whether or not life insurance covers death after suicide. The answer is, yes, there are policies available which cover this cause of death.

However, these policies will only cover death by suicide after the policy has been in place for a set period of time.

This is usually 12-24 months, depending on the insurer.

If the policyholder passes away as a result of suicide during this time, it's likely a pay out will be declined.

If you're struggling and need help, you can contact:

• Samaritans - Call: 0116 123 or email: jo@samaritans.org
• Papyrus (for those under 35) - Call: 0800 068 4141 or email: pat@papyrus-uk.org
• The Silver Line (for those over 55) - Call: 0800 470 8090

Once you're accepted, contracting a terminal illness won't result in your loved ones being declined a pay out upon your passing.

However, most life insurance policies contain terminal illness cover as standard.

This means that if you're diagnosed with a terminal illness and given less than 12 months to live, you can make an early claim on your cover.

Unfortunately, with some policies terminal illness cover expires 12 months before the end of the policy, meaning that if you're diagnosed with a terminal illness during this period of time, you're likely to be declined an early pay out.

Although, your loved ones will still be issued a pay out once you pass, if you pass before the cover expires.

Whilst it's rare, it may be that you've made a claim on a loved one's life insurance policy (or on your own policy for terminal illness) and a pay out has been declined.

In this instance, if you believe that the decision to decline the claim was wrongfully made, you should contact the life insurance provider and follow their official disputes/complaints process.

If this doesn’t result in the outcome you were hoping for, you can contact the Financial Ombudsman Service, who will review your case and come to a final decision.

[1] https://www.abi.org.uk/news/news-articles/2024/9/protection-insurers-pay-out-record-7.34-billion-to-support-individuals-and-families/