It is rare for a life insurance policy to not pay out. The main things that could cause life insurance to not pay out are:
1) The cause of death is suicide during the first two years or the policy. As I sadly found out from one of the policies I sold, this even applies to suicide committed by a child included on a child rider.
2) Death was cause by something that was exempted (e.g. if the policy had an exclusion for death caused while piloting a plane, or from acts of war).
3) Withholding or misrepresentation about risk on the original application (e.g. if someone had just been diagnosed with cancer and answered "no" to the cancer question on the application). If death occurs during the first two years of the policy, the insurance company will investigate to see that the application was filled out correctly, review the phone interview if there was one, etc. Minor errors or omissions will be corrected by adjusting the premium. If the withheld or incorrect information would have caused the person to be uninsurable, the life insurance will not pay out.
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1) The cause of death is suicide during the first two years or the policy. As I sadly found out from one of the policies I sold, this even applies to suicide committed by a child included on a child rider.
2) Death was cause by something that was exempted (e.g. if the policy had an exclusion for death caused while piloting a plane, or from acts of war).
3) Withholding or misrepresentation about risk on the original application (e.g. if someone had just been diagnosed with cancer and answered "no" to the cancer question on the application). If death occurs during the first two years of the policy, the insurance company will investigate to see that the application was filled out correctly, review the phone interview if there was one, etc. Minor errors or omissions will be corrected by adjusting the premium. If the withheld or incorrect information would have caused the person to be uninsurable, the life insurance will not pay out.