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Navigating the Contestability Period: Why Some Life Insurance Claims are Denied

Life insurance is an essential instrument to safeguard those you love financially in the event of your passing. There are a variety of reasons that life insurance might not be able to pay as you expected. This article will look at the most frequently-cited causes why life insurance policies might not be able to pay and how you can stop it from happening.

1. Inability to disclose information

If you’re applying to purchase life insurance you’ll have to divulge all pertinent details about your lifestyle, health and lifestyle. The information you provide the insurer to evaluate the likelihood of insuring you and to determine the value of the policy. If you don’t divulge any relevant information that may affect your risk the insurer could decline your claim.

For instance, if you’re suffering from a medical condition that is pre-existing however, you don’t mention it when you apply to purchase life insurance, then the company might deny your claim in the event that you die because of this health issue. If you’re also a smoker, but you do not disclose the fact, the insurance company could decline your claim when you die as a result of an illness caused by smoking.

To stop this from being a possibility, be sure to give all the relevant details when you apply in life insurance. Be truthful and thorough in your responses, and make sure you don’t miss any information which could affect the risk you take.

2. Suicide

The majority of life insurance policies include the suicide clause. This is a condition that, if a policyholder dies in suicide within a specified period of time after the policy is removed (usually 2 years) then the insurer does not pay an amount of death compensation. This is due to suicide being considered to be a deliberate act, and therefore not eligible for insurance coverage.

To avoid this being a reality, go through the policy thoroughly and fully understand what the suicide provision is. If you’ve any depression or thoughts of suicide It is important to report this information to the insurance company when you apply to purchase life insurance.

3. Policy Delay

If you don’t pay the premiums for life insurance your policy will likely to expire and cease to be valid. If you die after the policy has expired the insurance company won’t pay any death compensation.

To avoid this occurring, ensure that you make sure you pay your premiums in time. If you’re struggling to make payments, call your insurance company to discuss options.

4. Death during the Contestability Period

The majority of life insurance policies come with a contestability period. This is the time (usually about two years) following the time when the policy has been removed during which the insurance company can look into any claims and refuse coverage if there is any evidence of fraud, false representation or other problems.

If you pass away during the contestability period, and the insurer discovers evidence that you made false statements in your application or you were involved in other frauds they might deny your claim.

To stop this from being a reality, you must be truthful and accurate in your application. Also, do not engage in any fraud that could affect your coverage.

5. Accidental Death Exclusion

Certain life insurance policies include an exclusion from accidental death meaning that if you die due to an incident that is excluded from protection (such for a car accident intoxicated driving) the insurance company won’t pay the death benefit.

To avoid this occurring, ensure that you be sure to read the policy thoroughly and fully understand any exclusions which might apply. When you are involved in risky behaviors that could cause an accident that is not covered it is essential to declare this information to the insurance company when making an application for insurance on life.

6. Death in a High-Risk Activity

Certain life insurance policies contain exclusions in the event of death in high-risk sports, like skydiving, mountain climbing or bungee jumps. If you die while engaging in an activity with high risk which is not covered and the insurance company is able to refuse to pay.

To stop this from occurring, ensure that you go through the policy thoroughly and be aware of any exclusions that might be in place. If you are involved in activities that are high risk It is important to declare this information to the insurance company when you apply in for life insurance.

7. Dead outside of the coverage area

If you pass away outside of the coverage area defined within your contract, your insurer could refuse to pay your claim. For instance, if the policy stipulates that coverage is only available within the United States and you die in a foreign country the insurer could refuse to pay your claim.

To stop this from being a possibility, go through the policy thoroughly and be aware of any limitations on coverage. If you frequently travel or live outside the zone of coverage, it is important to inform the insurance company when you apply in for life insurance.

In the end life insurance is an essential tool to ensure the security of the financial security of your family members in the event of your passing. There are a variety of reasons life insurance won’t pay out, for example: inability to divulge details such as suicide, policy lapse and death in the contestability period, accident death exclusion, death while engaged in the course of a high-risk event, or death outside the zone of coverage. To avoid this from occurring, ensure to read the policy attentively and provide all pertinent details when you apply for life insurance and make sure you pay your premiums in time.