Death is an unfortunate yet inevitable part of life. We try to protect our loved ones as best we can once we’re gone; usually, that involves a robust life insurance policy. If you have an existing policy or are in the process of acquiring one, you may be worried about whether your policy will pay out. Can life insurance claims be denied?
Almost all (99%+) life insurance claims pay out with minimal fuss for the grieving parties. However, some circumstances can cause your insurer to withhold payment. Non-payment can be distressing for your loved ones during their time of grief and a source of stress for you as the policyholder. Avoid these mistakes, and you will keep your policy valid, helping your loved ones get the support they need.
Not disclosing a medical condition
If you have a life insurance policy, you must keep your insurer up to date with any notable medical conditions or injuries you incur. It may seem like a hassle, but this is one of the main reasons life insurance claims are denied. Update your policy to reflect your changes as soon as possible to keep your life insurance policy from becoming void. We recommend that our customers review all insurance products at least once a year to ensure that nothing is forgotten or omitted.
If you are worried that your medical circumstances will leave you unable to set up coverage, choose products such as no medical life insurance and guaranteed issue life insurance. Be truthful on your application and know that these insurance products will cover you as long as you are forthright about your conditions.
If you have an existing policy with us and need to update us on your circumstances, please get in touch as soon as possible. We want to help keep your policy valid.
Intent to deceive
It should go without saying, but if you misrepresent your health, lie about your circumstances, or omit crucial information, your policy may no longer be valid.
A typical health insurance application may ask for information in the following areas. Be prepared and go in with honest answers:
- Medical history. This includes current health conditions, mental health conditions, prescription history and family health history (parents and siblings).
- Risky hobbies. This includes activities like car racing, mountain climbing and skydiving.
- Risky behaviours. This includes tobacco and alcohol use, drug use, criminal records and dangerous driving behaviours such as DUI convictions or other traffic violations.
- Dangerous occupations. Construction workers, active military personnel, firefighters, law enforcement and pilots can face higher life insurance rates. If you keep it a secret, your loved ones will not receive a payout.
Failure to pay your policy
If you have a policy but have fallen behind with your payments, you may find your coverage voided. You must be up to date for your loved ones to be able to claim. Most insurers have a grace period. During this time, claimants can catch up on payments they have missed, but there cannot be an outstanding amount of several months unless you have made an arrangement with your insurer.
If your payments have lapsed, you may be able to bring your account up to date to reinstate the policy. Reinstatement terms depend on the product and your insurer. You can expect to pay additional interest and have a time limit to clear the balance.
We know your financial circumstances are likely to be changeable right now. If you can no longer make your payments, we can help you explore cheaper plans.
The assisted suicide debate continues, but for now, suicide within the first two years of taking out a policy usually means a life insurance claim will be denied. This can differ depending on your policy and insurer. In the event of suicide, your insurer may refund the life insurance premiums you have paid to your loved ones, but again, this is policy dependent.
Outliving your term life insurance policy
Finally, if you have coverage under a term life insurance policy, you could outlive the term! Term life insurance can cover you for 5-30 years. It’s a great product for homeowners looking to cover outstanding mortgage costs and provide security to those left in the home.
Once your term has ended, your life insurance policy is void. Get in touch to organize additional cover for the future to maintain your loved one’s standard of living, pay for funeral expenses, education, debt repayments or anything else you need.
Of course, if you are happy with your term life insurance policy, you have the option to:
- Extend the term
- Convert your policy to permanent life insurance
It Only Takes a Call
Life insurance needn’t feel overwhelming. If you are looking to take out a new life insurance policy or would like to talk to our team about your options, we will be happy to give you a call.
Blue Country Insurance – all your protection under one roof… because your health and life matters.