When Does Life Insurance Not Pay Out?

  1. 63333 POINTS
    Peggy Mace
    Most of the U.S.
    Unless someone has committed suicide in the first two years after getting their life insurance policy, or misrepresented their health information on their application AND their life insurance policy has been in effect under two years, their policy will pay the death benefit. There are very few situations where a life insurance policy will not pay out.
    Answered on May 3, 2013
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  2. 63333 POINTS
    Peggy Mace
    Most of the U.S.
    Life insurance usually pays out. The most obvious things that cause a life insurance policy to not pay our are suicide being the cause of death during the first two years of the policy, or if there was a gross error or omission on the application that caused the policy to be approved when it should have been declined, and then the insured person passes away from that condition during the first two years of the policy.
    Answered on August 11, 2013
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  3. 21750 POINTS
    Jim Winkler
    CEO/Owner, Winkler Financial Group, Houston, Texas
    That is a great question! there are only a very few reasons why your policy would not pay out. The first would be that your policy was a term life policy, and you outlived the term ( AARP and AAA offer this type of policy, and they end at the age of 80, so if you live to be to 80 and a day , you won't get paid). Another reason would be that somewhere along the line there were missed payments, and the policy lapsed. In that case, the coverage ends also, and you will not get paid. Another reason would be if it was determined that your answers on your application were less than truthful, and that was discovered. In that case, your policy would be terminated, and you would not get paid. The last reason for many companies is the clause that says that the policy won't pay if your death was a result of the commission of an illegal act. For example, if you were killed in a high speed drunken driving accident, and your policy contains that clause, it is likely that you won't get paid. The same is true for most policies and suicides, if they are committed in the first two policy years. In virtually every other case, you will get paid. I hope that helps, thanks for asking!
    Answered on July 3, 2014
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  4. 10968 POINTS
    Tim Wilhoit
    Owner, Your Friend 4 Life, Brentwood TN
    Life insurance "pays out" at the time of a certified death certificate is received by the carrier. There are very exceptions which would be fraud or misrepresentation at the time of application or suicide. Both are excluded for the first two years the policy is in force. After two years even then the policy would "pay out". There are smaller guaranteed issue plans with a schedule of benefits paid over time that are subject to the same two year rules. Even in cases of fraud or suicide the life insurance company would refund all of the premiums paid.
    Answered on July 10, 2014
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