When you or the person you are beneficiary for dies, the funeral and other costs associated with death will be paid for with your life insurance. The beneficiary on the life insurance policy would need to file a claim for the death benefit to payout. Sometimes when the beneficiary claims for the life insurance, something may come up, that causes the life insurance to not payout entirely.

Here are reasons why insurance won’t payout:

1. You Died By Suicide

As insurance companies want to take as little risk as possible, some terms may cause life insurance not to payout if the death with caused by suicide. Therefore, insurance companies will usually check if an applicant has a history of depression or past suicide attempts before providing the applicant insurance coverage.

Depending on the insurance company, some may pay out for suicidal deaths if the insurance policy has been in effect for at least a certain amount of time, usually two years. Companies add the two-year wait because some people might plan to get life insurance just before suicide to help their family when they die. Sadly this is too much risk for the insurance company to take on.

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2. You Put Incomplete or Inaccurate Information On Your Application

When applying for life insurance, it is vital to be as thorough as possible on your application. There are many instances where life insurance is not eligible to be paid out because there was missing information on the policyholder’s initial application. In addition, having misinformation on your application can also result in not having the death benefit paid out, such as not telling the truth about your age or health conditions.

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3. You Died By Participating In High-Rish Activities

Suppose some of your favorite hobbies are things that are high risk, then insurance companies may not payout if you were to die while doing those high-risk activities. Activities and hobbies that are as high risk are skydiving, scuba diving, cliff jumping, or being a commercial fisherman. These activities risk that you might end up living a shorter amount of time than the average life expectancy.

If you die due to participating in these high-risk activities, then there’s a chance life insurance won’t be paid out. There is something called high-risk life insurance, which is something you should consider if you live a high-risk lifestyle; it costs more than regular life insurance.

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4. You Died From Illegal Activities

Death by illegal activities is another reason why life insurance may not payout. If you are participating in unlawful activities, you are at higher risk for insurance companies. Illegal activities do not only mean if you die from illicit activities such as drug-related or gang-related but also if it’s from something like speeding and getting into a fatal car accident. If you have a history of speeding tickets and car accidents, or you have been arrested for illegal activity, there’s a chance you might have your insurance application denied.

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5. You Live In A Different Country Or Travel Abroad

If you move to a different country or travel abroad, it’s essential to keep your insurance company updated about these travels. If you do not keep the insurance company updated, then there’s a high chance that if you die abroad, then your death benefit won’t get paid out. In addition, when applying for life insurance, the company will also most likely ask you if you are planning to travel outside of the country within the next two years.

You might think you are safe because you have travel insurance, but that is not the case. Travel insurance will help you if an emergency comes up while traveling abroad, but it will not help your loved ones if you die overseas.

For some insurance companies, it depends on where in the world you are traveling, whether or not they will pay out if you were to die there. For example, countries that are less developed and pose a higher risk of illness or danger are countries where your insurance company may not payout. On the other hand, if you are traveling to a country with a lower risk of death, like Canada, your insurance company may be more likely to pay out.

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6. You Did Not Keep Up With Your Payments

For life insurance to get paid out, whether it is term or whole, the insurance premium needs to be paid by you. You cannot let your premium go unpaid, or your loved ones will not get paid out your death benefit to help pay for your funeral and other expenses related to your death.

Make sure to get a life insurance policy you can afford; there are different types, such as term and whole life insurance. Term life insurance is usually more affordable, but it only provides coverage for a specific amount of time.

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7. You Lived Longer Than Your Policy Term

If you have term insurance, you must remember that term insurance will only cover you for the amount of time included in the policy. For example, your insurance term could be 10, 20, or 30 years; if you live longer than the term of your insurance policy and do not get extra coverage after that, then when you die, there will be no death benefit paid out.

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8. You Did Not Keep Your Insurer Updated

It’s essential to keep your insurance company up to date on any significant changes in your life, such as your health condition or drastic change in your living situation. If you do not keep your insurance company updated, they will not know the risk they are taking by covering you, and if you were to die and they find out you did not provide all the required details, the company can deny paying out your death benefit. Some people may avoid updating their insurance company because they fear their insurance premium increases at renewal. Still, it’s better to pay a bit more premium than not to have your death benefit paid out to beneficiaries if you suddenly die.

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9. You Died In An Act Of War

Most insurance companies have an act of war clause. An act of war clause means that if you were to die due to an act of war, such as in a terrorist attack or a military invasion, then the life insurance death benefit is likely not to get paid out.

Insurance companies will not pay out for death caused by acts of war because they need to manage its risk and stay profitable. In the act of war, this can cause many people to die simultaneously and have life insurance claimed at the same time. So many deaths from one event would cause a lot of claims suddenly and could cause the company to become unprofitable.

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Things You Need To Watch Out For When Applying For Life Insurance

To make sure that life insurance will give the most coverage and payout to your loved ones if you suddenly pass away, be sure to carefully watch out for clauses and how accurate your application is. Life insurance companies thoroughly screen applicants and may deny applicants if covering them would be too high a risk for the company.

When filling out your life insurance application, be prepared to answer a series of personal questions honestly. The life insurance company will want to know absolutely everything about you before processing your application.

One of the biggest things life insurance companies will want to know about you is your health history. You will need to let them know if you have a family history of severe health issues and if you currently or have had health issues. Health history also includes mental health issues as well.

Insurance companies have access to a database to get all your medical records. If they find something out about your health that you did not include on the application, you risk having your application denied or your death benefit not being paid out.

During the application process, insurance companies will also want to know if you have a history of using drugs, alcohol, or prescription medications. You must be honest about your use. The company will find out if you have a known problem with substance abuse and if a doctor told you to get addiction treatment.

Insurance companies don’t only want to know about your health but also about how you like to spend your time. So if you participate in any risky activities that have a higher chance of resulting in death, it’s essential to be honest about that on your life insurance application.

Activities you’ll want to let your insurance company know about are things like extreme mountain climbing, car racing, or skydiving. If these activities are some of your hobbies, you risk having your application denied or paying a higher premium. On the other hand, if you don’t tell your insurance company about these activities, you risk not paying your death benefit out if you die while participating.

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