Life insurance is one of the best ways to provide a safety net to your family, in the event of your death.

The payout from a claim could be used to pay off debt, like a mortgage, help with funeral expenses or provide an inheritance for your loved ones.

Whilst life insurance provides peace of mind, you might wonder how often life insurance claims get denied and leave beneficiaries empty-handed. As harrowing as this seems, you should know that very few life insurance claims are denied. According to figures released by the ABI (Association of British Insurers) 98.3% of protection claims were paid out in 2019

“The high number of claims paid should give people confidence they can trust that their insurance provider will be there when they need them, helping families get back on their feet and providing valuable safety nets when the worst happens”.

Roshani Hill

The Association of British Insurers

The Association of British Insurers (News)

Whilst there’s very few incidences of life insurance companies declining life insurance claims, it’s certainly worth knowing what can put a claim into dispute. In this article we have outlined some of the main reasons claims may, sadly, be refused. 

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Not Disclosing Medical Conditions and Lifestyle Information

When you purchase a life insurance policy, you need to disclose medical conditions and other potential risk factors. If you fail to give accurate information during the application process, any claim on your life insurance policy could be denied in future. 

Any failure to disclose information when taking out a life insurance policy could be considered a misrepresentation. These could be false or misleading statement(s) or a withholding of information. In some cases, a misrepresentation could mean a policy is issued which would have otherwise been denied. 

Most policies include a contestability clause (usually between 1-2 years) where the insurer may request further information regarding the death. This might be through the form of post-mortem notes/medical records to allow the insurer to determine whether any information was withheld during the application process. If your insurer finds evidence of misrepresentation, the policy could be voided and your beneficiary may not receive a death benefit. Just bear in mind that insurance companies have many different ways to verify the data you provide on an application.

What kind of information will insurance providers require me to disclose on a life insurance application?

REMEMBER: You should receive a copy of any application you submit for life insurance directly from your chosen provider (or providers). It’s really important to review your application summary and contact the insurer immediately if you notice any of the information disclosed is incorrect or incomplete. Take time to double check your application questions and answers, as this will help you to catch any errors before it’s potentially too late!

The kind of information you will be asked to disclose typically includes (but is not limited to): 

  • Your medical history - this includes information on both historic and current health conditions, as well as information on any medication you've taken or are taking. Providers will likely also ask about your family medical history. 

  • High risk hobbies - for example whether you take part in activites such as rock climbing, scuba diving, motor sports or are in the armed forces reserves. 

  • Your occupation - as an example, being a police officer is generally considered as being higher risk than working in an office. 

  • Your lifestyle - including details regarding your alcohol intake and 'smoker status'.

Life Insurance Premiums Were Not Paid

In some cases, your beneficiaries could try to make a claim without realising that you didn’t pay your premiums before death.

If you’re currently behind on your life insurance payments, you may be able to rectify the situation, depending on how far behind you are. Depending on the individual insurer, there may be a grace period after the due date to make up any missed payment without being charged interest.

If the policy has lapsed due to non-payment, you may be able to reinstate the lapsed life insurance by paying your past due premium with interest. Please contact your insurer as soon as possible if you are struggling with your insurance premiums and they will be able to tell you how they can help.

If you’re struggling with debts generally, then please know you are not alone and charities such as Step Change may be able to help.

Outliving a ‘Term’ Life Insurance Policy

If you have term life insurance, you could potentially outlive the policy’s term, meaning there would be no death benefit payout.

If you need longer coverage, the insurer may allow you to renew the policy (at an increased premium) when you reach the end of the term. You may also be able to convert a term life policy to a whole-of-life insurance policy, but there’s a time window to do it. Make sure you know your policy’s dates and terms if you’re interested in changing it.

For more information on this topic, check out our article 'What Happens if you outlice term insurance?'

Death by Suicide

Life insurance policies usually have what’s known as a ‘suicide clause’ that usually lasts for between 12 and 24 months, depending on the insurer. If a suicide occurs during this time, the insurance company will typically not a make a payout (please check the Key Features Document of your chosen insurer for more details about this).

Making a Life Insurance Claim

To ensure a smooth claims process, be sure to tell your family that you have a life insurance policy and where to find it when the time comes. It’s usually best to keep the policy with other paperwork that your beneficiaries are likely to need and look for when managing your estate. Being organised goes a long way.

Being In The Know

It’s worth understanding the differences between the 2 main types of life insurance, being 'term' life insurance and 'whole-of-life' insurance.

‘Term’ life insurance policies run for a fixed period of time (known as the ‘term’ of your policy) eg. 10, 15 or 25 years - but only pay out if you were to die during the term of the policy. There’s no lump sum payable at the end of the term.

Whole-of-life’ insurance policies pay out regardless of when you die, as long as you keep up with your premium payments.

Naturally, these policies are typically more expensive than term insurance policies since as long as you keep paying your premiums, the insurer will always have to pay out, whereas you may outlive a term insurance policy.

TIP: Whole-of-life insurance is also known as life assurance by many insurers.

One of the main benefits of whole-of-life insurance is that it can help your family deal with any bills associated with inheritance tax. It also may appeal to you if you’re determined to leave some form of inheritance to your loved ones, or if you want to help with your funeral costs.

Get in touch with Cavendish Online today

You may already have a life insurance policy in place but haven’t looked at it for some time. It’s certainly worth regularly reviewing it to see if it still fits your needs, and speaking with us about low-cost life insurance.

At Cavendish Online, we are committed to helping you find the best life insurance policy for your needs.

Get a quote online or call us now on:

03456 442 540

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