7 Ways Life Insurance Will Not Pay Out

Last updated: November 17, 2017 at 12:47 pm

7 ways life insurance will not pay out

When purchasing a new life insurance policy, many people don’t consider that there could be a specific situation life insurance fine print where the policy does not pay out to the beneficiary.

A life insurance policy is a contract, and just like any contract, you should read the fine print before signing it. The fine print is where certain exclusions are made known, where specific circumstances would not allow the beneficiary to receive the payment on the policy if you die.

In other words, you can’t simply take out a life insurance policy and assume you have a guarantee that a certain amount of money will be paid no matter what. Common sense will tell you that it probably doesn’t work like that, but here are seven specific ways life insurance will not pay out.

1. Suicide

One of the more standard yet alarming instances where a life insurance policy will not pay out is in the case of suicide. Depending on what state you live in, there will be a suicide clause, meaning if you commit suicide within that time frame, the beneficiary would only get the premiums back, but not the death benefit.

Depending on your state, there may be a time frame in which suicide would prevent a pay-out.

This suicide clause is actually an incontestability clause, that window of time where insurance companies can investigate and deny claims. The period is typically two years in most states and one year in others, and it begins as soon as the insurance policy goes into effect. For the life insurance company, it protects them from people who take out a large policy, then commit suicide for the “betterment” of their family’s financial situation. It seems like a bizarre and unbelievable act to most people, but it used to be more commonplace than you would think—before this incontestability “suicide clause” went into effect.

2. Smoking or Another Health-Related Issue

The incontestability clause comes into play again if you were somehow less than forthright about your past smoking habits or if you somehow forgot to mention that you had high blood pressure. If the insurance company finds out otherwise during this one- to two-year period, they have a right to cancel your policy.

Asking if you smoke or if you have ever smoked is a pretty standard question on any life insurance policy. Maybe you quit smoking a couple years ago, but the insurance company will still ask if you used to smoke and how long ago you quit. It matters because the effects of smoking are long term. Your classification as a non-smoker could be satisfied by not smoking for a couple years, but depending on the insurance company, as many as five or 10 years might need to pass before you are in the clear to be labeled as a non-smoker.

Where something like high blood pressure is concerned, this is a perfect example to be completely honest when filling out a life insurance application. Let’s say you don’t mention that you have high blood pressure on your application, then you die in a manner that has nothing to do with your high blood pressure—maybe a car accident—within the period of contestability. The insurance company could come back to the fact that you did have high blood pressure and it could have been the cause of the death. See how that works?

Keep in mind that while this contestability period is in force for a specific period of time—one or two years—there is also a material misrepresentation clause, and that’s permanent. This refers to intentionally withholding information from the insurance company that would have resulted in having your application denied. In other words, you lie on your application in order to improve your chances of being approved. A good example, again, is smoking. This rule would apply even in the event that a claim has already been filed.

3. Dangerous Activities

Let us shop for life insurance for youYou may have heard of a professional athlete who has a certain clause in their contract that does not allow them to participate in what is considered a dangerous activity. It could be fairly obvious, like skydiving, or even something more common, like riding a motorcycle.

The same applies to a life insurance policy. Think about it. Life insurance is all about risk management. If you are actively involved in jumping out of airplanes with a parachute (that may or may not work) on your back, you are a higher risk applicant than someone who doesn’t involve themselves in that kind of activity. So be honest about your dangerous hobbies or lifestyle when asked. If you are actively involved in one of the dangerous activities listed on the application, you can still do it, but you will need to pay for that protection.

4. Illegal Activities

This goes back to that common sense statement, but it’s worth mentioning anyway. If you die while committing a crime or participating in any kind of illegal activity, the life insurance company can refuse to make a payment. So, if you are killed when you are in the midst of stealing a car, your beneficiary won’t be paid.

That’s fairly obvious, but this next point might surprise you. What if you are doing something illegal and you don’t even realize it, like walking on private property? Trespassing is a crime, even if you didn’t know you were trespassing. So if you die while doing that—let’s say you have a heart attack while being chased by a big dog—your claim could be denied.

5. Act of War

Some life insurance policies have an Act of War exclusion in them. It’s not designed to exclude soldiers. Rather, it’s in place to deny claims for those civilians who are killed in wars or by acts of war, like journalists who finds themselves in the midst of battle on a regular basis or people who travel to regions of the world where conflict and battles are going on.

6. Living Outside the United States

Ways life insurance does not pay out — living outside the United States

Here’s one you may not have considered. Let’s say you take out a life insurance policy while you are living in the United States, then you move to another country. There could be a clause that excludes the payment of a death benefit if you are not living in the U.S. at the time of your death. Be sure to look for any mention of this in your contract, especially if you see yourself leaving America in the near future.

7. Fraud

When it comes to life insurance, honesty is always the best policy.

The insurance company is going to investigate the cause of your death; you can be sure of that. They will look at the events that led to your death and then compare them to your original application. If they find that you had certain health conditions or that you were involved in dangerous activities all the way back to the time of your original application and you didn’t mention them, the company can deny payment on the claim.

Read the Fine Print and Get Insured With Confidence

This is, by no means, a comprehensive list of the ways life insurance won’t pay. They are some of the more common instances, however.

Bottom line, be completely honest and don’t ignore the fine print details on your life insurance policy. You don’t want to be responsible for losing the benefits on that policy because you “didn’t know” or because you thought you could get away with something by being less than honest. The best advice is to be sure to read your entire insurance contract—yes, especially the fine print—before you sign it.

If you are unsure of anything, just ask. That’s what the licensed, professional True Blue agents are here for, to guide and direct you to the insurance policy that is best for you. They will read the fine print with you and help you to understand what it all means, especially as it pertains to your particular situation.

When you are ready to apply—or even if you just have questions—simply pick up the phone and call 1-866-816-2100.

As an independent insurance agency, True Blue Life Insurance deals with all of the top insurance companies, so we will work to get the best price for you and address any concerns you may have. We deal with the insurance companies on your behalf, and the policies are issued immediately or within 48 hours, depending on the insurance provider you choose.

Finding a life insurance policy that’s perfect for you is what we do, but we read the fine print, too. Let’s talk about your needs and what we can do to help you.

27 replies
  1. Megan Buechel
    Megan Buechel says:

    My father carried life insurance through Kroger for years. When he died they told me that as the sole survivor they don’t have to pay me anything. What is the point of him paying for the insurance if I cannot collect? Help me please. I believe I have 2 years and in April 2017 it will be 2 years. Call me at 7736837742 Thanks

    • jesus
      jesus says:

      I’ve been doing a lot of research and from what I have read, I have yet to find an insurance company that isn’t filled with crooks!!!! Jesus Christ what a nightmare it must be to pay life insurance for years just to die and leave such unspeakable burdens to your loved ones!!! Such evil in this earth.At this point I’m just thinking of putting money in my savings every week. better than trusting these THIEVES that will call you 24/7 to sell you insurance and will be all super nice in the beginning in order to get your money but then when its time to pay out just disappear or find loop holes to not pay. What scum of the earth!!!

      Megan I hope that all went well and that you were able to stick it to these big corporations that think they can get away with whatever they want just because they have money!! give us an update!!! hell email me @jesusrosas083112@gmail.com if you did manage to get what was rightfully yours.

  2. Pat
    Pat says:

    We took a nother ins policy out with colonial penn life we had one policy with them .i ask the lady on the phone if my husband die in 3 months will he be covered she said yes .but he die 10 months later.that he was cover for the full amount. Now they dont want to pay.what can i do about it.

    • Brian Greenberg
      Brian Greenberg says:

      Colonial Penn’s guaranteed issue product has a 2 year limited benefit period. All guaranteed acceptance policies have this. The limited period depends on the company, typically either 2 or 3 years. If the insured passes due to a health related death (non-accident), the company returns all the premium paid, plus interest.

      The representative should have been very clear on this on this limitation of the policy, it is not good business practice to not explain this to customers.


      If you have it in writing that the agent told you the incorrect information, email works too, you can contact your state insurance department for assistance.

  3. D.v.
    D.v. says:

    Just recently got Fidelity life insurance on myself .. I left fiance as beneficiary I am only 29 but am afraid of a car wreck happening honestly (many bad drivers I’m always having to avoid in my area) any ways I have awful family members that have robbed my home 2x now the second time they were prepared for me to show up with knives and etc. I have to keep moving but they always find out where I am .. if they do manage to kill me while robbing me next time, will my insurance still Grant my fiance the benefits?

    • Brian Greenberg
      Brian Greenberg says:

      Yes. Your life insurance policy should pay your fiance. Fidelity sells a few different policies including a term policy and an accidental death benefit policy. The accidental death policy does not cover deaths from health related causes. If something happens while someone is robbing your home or on the road in your car, it is considered an accident. Most companies do have an exclusion in which they do not pay out if you die while committing a felony.

  4. C R Eller
    C R Eller says:

    Our father passed away two years ago. Prudential denied a claim before we even filed one and has to date not paid. He was in a MVA on his own property and died a week later from a slow brain bleed. They requested police report, autopsy report. They were told we had none of those things and gave them copies of his medical records. There was no substance abuse. We are at wits end. How do we make them pay?

    • Brian Greenberg
      Brian Greenberg says:

      I recommend you contact an attorney specializing in denied insurance claims. There are many questions they will need to ask about the particular policy you had. Was it a policy through work? Was it an accidental death benefit policy? Did the claim occur within the first two years of the policy issue date? I recommend you contact http://www.lifeinsuranceattorney.com/. Their phone number is (800) 330-2274.

    • Brian Greenberg
      Brian Greenberg says:

      No. Insurance companies are very strict regarding who you can get a policy on. They must have “insurable interest”. Anything outside your immediate family or business is typically off limits.

  5. Scott Lee
    Scott Lee says:

    Aunt had Univeral LIfe for 50k, 21 year old policy. found out today after beinig told on June 2nd by Transamerican that I would receive 42k, that I would only be getting $52. why would this happen? I have a bill for the day she died and never receved anything stated policy was not active. Isnt the reason for UL to make payments off interest? Why would rep from Transamerica tell me 42K and then I get email today from compliance officer stating $52.00
    Please help me understand

  6. Melda
    Melda says:

    Midland life insurance dont want to pay because they need a report of death of us citizen abroad. I tried to get this while i am in US but the US embassy wanted document I dont have in US and now the insurance dont want to pay even though i paid the premium for over 2 decades.

    • Brian Greenberg
      Brian Greenberg says:

      This is a tough one. It is very hard to collect on an insurance policy without a death certificate. Can you get the death report from the country needed and then fax/email/mail the report to Midland? I know it sounds like a bunch of hoops to jump through, though I think the insurance company needs a death certificate in order to legally pay the claim.

  7. Mary
    Mary says:

    You hear about all of these sad baby died in hot car stories. If they had insurance would it pay out to the family if this happened?

  8. Ham
    Ham says:

    Why would life insurance company request a Divorce
    Degree? I have paid 30 years on a policy on my ex-spouse.

    • Brian Greenberg
      Brian Greenberg says:

      She may be wanting to make a change to the policy and only the owner can make changes.
      Sometimes it is stipulated in a divorce decree who the owner of the policy must be and who the beneficiaries are.

  9. Charlie
    Charlie says:

    My father passed away two years ago and still don’t know where his life insurance policy is located and with what company. He told me before me passed away that he took out a policy and I was the beneficiary. Just wondering how I would be able to locate the policy? Since I can’t find anything. I’m overwhelmed…

    • Luke Kinton
      Luke Kinton says:

      Hi Sara!

      Our recommendation is based largely on what you are needing. Generally speaking, term life insurance works well for just about everyone and provides great coverage for the money.

      Almost every life insurance policy will cover both accidental death and death by natural causes. Why don’t you give us a call at (866) 816-2100 and we can walk you through some options?


  10. Dianne
    Dianne says:

    Truly that they do not explain clauses. My daughter took out a policy on July 5, 2017 – for her, her two young daughters and her spouse. MY daughter has NEVER been a smoker. Tragically, on July 8, her 3 month old daughter (my granddaughter) was at the babysitter’s and sitter claims she laid her on her back but found her face down. She died that day (3 days after the policy) and death certificate says SUID and cause is undetermined. AS you can imagine, my daughter went through something horrific and was put on Xanax for her nerves and began smoking. So, for whatever reason, the insurance company said they needed to complete the application process and get my daughter’s blood and urine. Well, guess what? of course it came back that she had nicotine. So, they put her in a higher bracket and had her pay the differrence in now the higher premium. Insurance company (Farm Bureau in Texas) has denied the claim. This is a tragedy in itself.


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