Life insurance is there to financially support your family and loved ones when you die. By paying a premium while you are alive, it can help with expenses such as funeral and burial costs, inheritance and replacement income for dependents when you are no longer here.
But life insurance is a contract, and if you have broken the provisions of the policy before while you’re alive, your insurer may refuse to pay out.
Life insurance policies can vary depending on what type of insurance you take out, but most policies will cover circumstances such as natural deaths, illness or injury and accidental deaths.
But, no matter what type of life insurance policy you take out, there will be policy provisions that the insured must adhere to be covered. If the insured dies, and the insurer sees that one or more of the provisions were broken, they may refuse to pay out, leaving your bereaved loved ones with nothing.
If you are not clued up on your life insurance provisions, they can be easy to break. For example, partaking in a ‘hazardous activity’ such as a skydive, or failing to disclose a medical condition could invalidate your insurance if you die.
We have rounded-up seven reasons why your life insurance provider may refuse to pay out, and what you can do to avoid this:
7 reasons why your life insurance may refuse to pay
For example, saying you don’t smoke, or you have no existing medical conditions during your insurance application could void the policy when you die
Your insurer may refuse to pay out if the policy has lapsed due to non-payment. Make sure you set up automatic payments and ensure the payment method is up to date to avoid missing any.
- Cause of death excluded by the policy
Depending on your policy provisions, the insurance may not cover some causes of death. This may include deaths caused by high-risk activities, or if you died whilst carrying out criminal activities.
- The beneficiary died before the insured
If you take out a life insurance policy but only name one beneficiary, and they die before you, it can be a long and complex process for someone else to claim the insurance benefits.
To avoid this, you should name a secondary beneficiary, and even a third if you see fit.
Some policies will have a waiting period after you take out the insurance where you won’t be covered. For example, for the first 12 months, you may not be covered for some causes of death, and if you die during this time, your beneficiary may not receive a pay out
Depending on what type of life insurance you take out, some policies may not cover suicides. Meanwhile, some may cover suicide but after a set number of months, depending on the policy provisions.
Some life insurance policies may only remain in place for a set period (a term). If the policyholder does not pass away during the term of the policy and they do not take out another life insurance with another provider, their death will not result in a payout.
Breach of insurance
However, you have to remember that life insurance policies are a contract, and the provider is also there to make money. This means that in some cases, the provider will be trying to find a way to avoid a payout, but although they sound like an expert in their field, sometimes they can be wrong.
In some cases, insurance companies will use tactics to convince their non-lawyer customers that they are not entitled to a payout by quoting the technicalities of the contract. But, although this can sound convincing, sometimes it is wrong, and a breach of the insurer’s contract.
If the insurer has refused to pay out on a loved one’s life insurance, but you believe you should have been entitled to the benefits of the insurance, this may be a breach of policy. If this is the case, you may be entitled to make a claim against your insurance company for a breach of insurance.
Protections are in place for insurance holders to ensure they get the payout they deserve, and with the help of a knowledgeable solicitor, claims can be made against your insurance company if you believe you should be entitled to a payout.
If you believe you should have been entitled to compensation from your insurance company but they refused to pay, contact Oakwood Solicitors team of legal experts today.
Further reading
Breach of insurance claims – Oakwood Solicitors
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Danielle Lightfoot is a Director and our Head of the Financial Litigation Department. Danielle joined the firm as a Paralegal in 2011 and qualified as a solicitor in October 2014. She has acquired ext…
