Branch Owner, TWFG Insurance Services, Fremont California and the Greater Bay Area Representing Dozens of Insurance Carriers
Life insurance has a two year incontestability clause. If a client knowingly misrepresented material facts on an application and the insurance carrier discovered the material misrepresentation a claim can be denied. Also there is a suicide clause meaning you can not commit suicide in the first two years of a policy as this would also deny a pay out form the insurance policy.
Insurance Advisor, Lordship Insurance Services, California
There are a few instances where Life Insurance will not pay. Some are not very probable to occur but they exist nevertheless;
1) 2 year contestability period - Insurers have the right to contest any claim filed within the first 2 years of being issued.
2) Lies on application - if you apply for insurance and it is issued and then it is found out that you lied (within the first two years of being issued), depending on the lie the insurance can be denied or the ony amount received back to beneficiary may be the premiums paid.
3) Insurance company goes defunct - highly unlikely and there are safeguards in place to ensure that claims are paid.
4) You apply for a policy but dont pay anything. If death occurs during this period an insurance company has a right to not pay a claim.
For the most part, when you purchase insurance from a reputable company, the claim will be paid. Insurance companies are known for paying on valid claims.
Self-employed Employee Benefits Provider, Upland, California
I agree with Jeff, Mark and Jerry's answers, but I would like to add a bit more. Life insurance also will not pay a benefit if the death occurred in a commission of a crime and in some cases any act of war, such as military service This is why the military provides its own coverage for our servicemen and women.
I have seen some policies that also won't pay if the death was the result of an insurrection or riot.
Basically, if you tell the truth on the application, you are not a current member of the armed forces serving in a war zone, and you are not a criminal, you should be okay!
Under what circumstances, will life insurance not pay?
Under most circumstances, life insurance pays as soon as a claim form and proof of death are submitted.
However, within the first 2 years, policies may not pay (other than refund premiums) if there was a material misrepresentation of fact. Something was not disclosed that would have affected the underwriting of the policy. It's important to tell the truth. For example, if you smoke, declare it, or if you went to see doctor for an issue and did not declare it.
Also if death is by suicide within the first 2 years of policy issue or last reinstatement, the policy will not pay.
After 2 years, the incontestability period has passed and the insurance company has to prove fraud in order not to pay.
This is a guideline only, as the policy wording (including any exclusions) and the local laws are applicable. Please consult a lawyer familiar with insurance law.
If you have further questions, or feel that I could be of assistance, please do not hesitate to contact me.
If you would like to work with a local life insurance broker, you could start with a Google search. For example, if you search for: life insurance broker Halifax or life insurance agent Halifax, my name, along with several others, will come up. You can use the same method to find a life insurance broker in your community.
If your life insurance policy has a rider that excludes a certain type of death (e.g. death from skydiving or while piloting a plane), the policy will not pay if death occurs by that cause. Life insurance policies will not pay for suicide during the first two years of the policy. And most policies exclude death resulting from the commission of a crime, acts of war, or some other obscure reasons.
Aside from these unusual circumstances, life insurance will pay. Companies can contest payment of the policy during the first two years it is in existence, so just be sure to answer the questions asked of you when completing your application and phone interview or exam. Then you will not have to worry about the contestible period hampering your policy's payment.
Business Development Officer, T.D. McNeil Insurance Services, Fresno, California
A life insurance policy is based on your representations. If you attempt to defraud a company, the company may take the case to the court to decide if they are liable to pay the death claim. One famous case involved a career criminal who applied for life insurance under his legal name. When he was murdered the company discovered that he was a famous gangster and the court agreed that he had attempted to defraud them.
Great question! There are a few reasons why they may not pay. Any kind of misrepresentation, ( A polite way of saying that someone lied, or stretched the truth) can result in the company not paying the death benefit. Many policies will not pay if the death occurs in the committing of a crime, or while under the influence of drugs or alcohol. You will want to read the fine print on your policy to see what circumstances will apply to you. Thanks for asking!
.JPG){kind=avatar}
1) 2 year contestability period - Insurers have the right to contest any claim filed within the first 2 years of being issued.
2) Lies on application - if you apply for insurance and it is issued and then it is found out that you lied (within the first two years of being issued), depending on the lie the insurance can be denied or the ony amount received back to beneficiary may be the premiums paid.
3) Insurance company goes defunct - highly unlikely and there are safeguards in place to ensure that claims are paid.
4) You apply for a policy but dont pay anything. If death occurs during this period an insurance company has a right to not pay a claim.
For the most part, when you purchase insurance from a reputable company, the claim will be paid. Insurance companies are known for paying on valid claims.
I have seen some policies that also won't pay if the death was the result of an insurrection or riot.
Basically, if you tell the truth on the application, you are not a current member of the armed forces serving in a war zone, and you are not a criminal, you should be okay!
Under most circumstances, life insurance pays as soon as a claim form and proof of death are submitted.
However, within the first 2 years, policies may not pay (other than refund premiums) if there was a material misrepresentation of fact. Something was not disclosed that would have affected the underwriting of the policy. It's important to tell the truth. For example, if you smoke, declare it, or if you went to see doctor for an issue and did not declare it.
Also if death is by suicide within the first 2 years of policy issue or last reinstatement, the policy will not pay.
After 2 years, the incontestability period has passed and the insurance company has to prove fraud in order not to pay.
This is a guideline only, as the policy wording (including any exclusions) and the local laws are applicable. Please consult a lawyer familiar with insurance law.
If you have further questions, or feel that I could be of assistance, please do not hesitate to contact me.
If you would like to work with a local life insurance broker, you could start with a Google search. For example, if you search for: life insurance broker Halifax or life insurance agent Halifax, my name, along with several others, will come up. You can use the same method to find a life insurance broker in your community.
Aside from these unusual circumstances, life insurance will pay. Companies can contest payment of the policy during the first two years it is in existence, so just be sure to answer the questions asked of you when completing your application and phone interview or exam. Then you will not have to worry about the contestible period hampering your policy's payment.