When Would Life Insurance Not Pay Out?

A Life insurance policy would not pay out a death benefit claim if the policy lapsed and there was no extended term benefit on the life insurance policy.

Also, if a policy is terminated for non-payment of premiums or you simply cancel your life insurance coverage, a death benefit is not paid out.

If you commit fraud, a felony or another similar act,  the life insurance company will certainly contest the claim.

In addition, suicide is not paid out as a claim if the insured person commits suicide within 2 years of starting the life insurance policy. However, the suicide exclusion is only 1 year in some states.

Can Life Insurance Deny A Claim?

Yes, a life insurance company can deny a claim for a death benefit if the insured dies.

If an insured commits suicide within the first two years of life insurance coverage, the claim would be denied under virtually any company; however, there is only a one year suicide excision in some states like Colorado.

Also, if someone commits a material misrepresentation (fraud) in their application for life insurance coverage, and that is detected within the first two years of being insured, the life insurance policy would be cancelled with the money refunded.

Otherwise there would be no valid ground for refusing a claim on life insurance.

So, make sure to answer all questions truthfully when you apply for life insurance coverage as it may affect whether or not the life insurance company pays out a claim when you die.