Can A Life Insurance Company Deny a Death Claim?

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Life Insurance ContestabilityThis is a very common question.  If you’re going to rely on the life insurance company to take care of your family financially when you’re not around anymore, then you want to make darn sure they will pay. 

There are only 2 reasons why a life insurance company WILL NOT pay a death claim:

1.  Life Insurance Suicide Clause.  If you purchase a policy and within the first 2 years you commit suicide, the life insurance company will not pay.  However, after 2 years they will pay the full benefit. This is to ensure that people don’t purchase a life insurance policy, and then commit suicide just to their family now has the face value of the insurance policy.

2.  Life Insurance Contestability Clause.  If you provide inaccurate information on the application and you pass away within 2 years of the policy being in force, the life insurance company can deny your claim.  If the life insurer hasn’t rescinded the policy after 2 years, they CANNOT deny a claim.  Everything is covered after the first 2 years. 

For Example:
A stunt pilot who knows they will receive a better individual life insurance rate by lying to the life insurance company about his occupation and omits this information from the application.  The life insurance company has every right to deny his claim if he passes away within the first 2 years of the policy.  After 2 years, there is nothing they can do.

If you’re honest on the application and not planning on taking your own life, you have nothing to worry about.  These are the ONLY 2 circumstances a life insurance company will not pay. In every other case, the insurance company has to pay out for your plan. If you’re worried about purchasing a plan and the company not paying out because of some loophole or clause, don’t fear.

You’ve probably heard stories or rumors about someone passing away unexpectedly, and the insurance company refused to pay the family the payout from the policy because of some vague or shady reason. These simply aren’t true. More than likely, there were some details that weren’t included in the story and the insurance company had a legitimate reason for denying the coverage, like the person lied on the insurance application.

Bottom line:  After 2 years, anything and everything is covered by your policy.  In the history of life insurance, there has never been a claim denied other than for these 2 reasons.

Life insurance is one of the most important investments that you’ll ever make for the future of your loved ones. If you were to pass away tomorrow, you family members would be left with all of your debts and final expenses. They could find themselves with thousands of dollars of debt and have no resources to pay off any of those bills.

Imagine if something tragic were to happen to you. Your family would have to pay your mortgage, car loans, student loans, business loans, funeral expenses, and much more. They can quickly find themselves up to their necks in unpaid expenses, but that’s where a life insurance policy comes in.

A life insurance plan can give your family the resources that they need to pay off any unpaid bills that you would leave behind. You don’t have to worry about the insurance company paying out the coverage if you passed away. As long as it’s after those first two years, your family will get the money and they can use it to get through the difficult time.

One of the most common reasons that households don’t have life insurance is because of the costs, most applicants assume that coverage would be too expenses and they won’t be able to afford it. In most cases, a life insurance policy is cheaper than you might think.
There are several lifestyle changes that you can make to help you get the lowest rates for your insurance coverage. The first is to focus on your health. Unless you choose a no exam policy, your overall health is going to play a major role in how much you pay for insurance coverage.

After you complete the paperwork for the policy, the insurance company is going to send a paramedic to your house or work to complete a medical exam. The exam is going to give them an idea of your health, which will be used to calculate how much of a risk you are to insure.

If you want to get better rates, you’ll need to improve your health through diet and exercise. Both of these are going to lower your blood pressure, lose weight, and lower your heart rate. These are all going to give you better results form the physical, and lower your chances of having severe health complications which is going to save you money on premiums.

Another way to improve your health is to quit smoking or using any tobacco. Smoking cigarettes drastically increases your chances of having health complications later in life, which means you’re more of a risk to insure. Smokers are going to pay twice as much for life insurance than a person that doesn’t smoke.

The best way to ensure that you’re getting the lowest insurance rates is by working with an independent insurance agent. Our independent agents don’t only represent one single company, which means that we can give you unbiased advice and connect you with the perfect and affordable policy.

If you have any questions about life insurance, or companies not paying out on policies, please contact us today and we can answer those questions for you and ensure that you’re getting the best policy coverage for you and your family. You never know what’s going to happen tomorrow, don’t’ wait any longer to start the life insurance process.

About Jeff Root

is the owner of He's an independent life insurance agent who has helped 1,000's of consumers purchase life insurance online and over the phone.

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