7 Reasons Why Life Insurance Won’t Pay Out

According to data from ABI, 97% of life insurance claims were paid out in 2020 by insurance companies in the UK.

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According to data from ABI, 97% of life insurance claims were paid out in 2020 by insurance companies in the UK. That leaves just under 1,300 claims declined in the year, posing the question – in what situations might your life insurance policy not pay out?

Here, we’ve put together a list of the most common reasons that cause claims to be declined, which will help you avoid making the same mistakes with your own insurance policy.

Failure to provide the correct information to the insurance company

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It goes without saying that all information provided to insurance companies regarding your personal details, medical history, occupation, and lifestyle should be completely accurate and up to date.

Another common problem is when people fail to disclose relevant information, such as a pre-existing health condition or if your situation changes during the course of your coverage term.

Another common problem is when people fail to disclose relevant information, such as a pre-existing health condition or if your situation changes during the course of your coverage term. You should always check whether you need to disclose certain information to the insurance company.

If you aren’t 100% transparent with your insurance provider, should the worst-case scenario happen, your family and loved ones could see their claim declined if the company finds any information you’ve left out. Especially information that would have resulted in a higher premium due to an increased risk.


There’s a lot of misconception regarding life insurance and committing suicide. The truth is that most companies will pay out if you commit suicide, however, most will stipulate a period in which they won’t. This period is usually at the beginning of your policy, such as the first 12 to 24 months.

To screen for clients who might be thinking of committing suicide for their loved ones to receive a payout, insurance companies check for a history of mental illness. If you have a mental illness or a history of mental problems, your insurance company will likely increase the premium cost.

You’ve missed premium payments

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If you pass away and your life insurance premium payments aren’t up to date, the insurance company will not pay out. This clause will be stipulated in your contract, so make sure to look thoroughly when taking out a new policy.

This issue can also affect welcome gifts. Most companies will refuse to send your gift if you fail to make payments. With some providers missing a payment can even result in the cancellation of your contract, leading you to have to take out another policy that might not be as well priced as the previous one.

A great way to protect yourself from this, if you’re unable to work and therefore can’t pay your life insurance, is to implement a waiver of premium policy in your contract. If you pass away during the period where you haven’t made payments due to being unable to work, the insurance company will still have to pay out. Note that it usually costs extra to include a waiver of premium clause in your contract.

If you pass away abroad

Depending on the type of agreement you have with your insurance company, some won’t pay out if you pass away abroad or move to a different country. It can be easy to forget to notify your insurance provider of these changes, but not doing so can result in a company declining a claim.

Most firms have a list of countries where they don’t provide coverage, such as a warzone or an at-risk country. If you’re planning to visit such a location, you must notify your provider and probably have to get extra temporary life insurance coverage that will cover you during that period.

Companies will also not pay out if you move abroad. Usually, your policy is only valid for the country you’re living in. So if you plan to retire elsewhere, make sure that you can carry your policy with you.

If your insurance policy term runs out

Perhaps the most common reason why a life insurance policy doesn’t pay out is if you outlive or surpass the coverage period. This, of course, only applies to term life insurance policies, which, once completed, will be terminated. You will then need to take out a new policy if you need more coverage.

On the other hand, a whole of life policy, which not all insurance providers in the UK offer, guarantees payment regardless of when you pass away – making it a great way to leave a lump sum of money for your family and loved ones.

The insurance policy doesn’t cover the cause of death

There are some specific incidents that aren’t covered by your insurance firm. The problem is usually due to miscommunication or failure in part by the policyholder to thoroughly check the policy. For example, an insurance provider might state that if you pass away due to an incident directly linked to a pre-existing illness, your loved ones won’t be eligible for a payout.

As a result, you must check your policy and discuss all details with the insurance provider to avoid any nasty surprises down the line.

Terminal Illness

You’ll usually get terminal illness cover with your life insurance policy, meaning that your family will get access to an early lump sum payout if you’re diagnosed with a terminal illness. However, if you’re diagnosed in the last 12 months of your cover term, the company isn’t obligated to pay out.

How to ensure your life insurance claim isn’t declined

As evidenced by this article, there’s plenty of reasons why an insurance company might not pay out. The best sure way to ensure that your family and loved ones are protected is to thoroughly check the small print of your policy and make sure that you’ve included all the potential incidents in your coverage.

If your family believes your claim was unfairly declined, some steps can be taken to challenge the company’s decision. However, it’s always best to avoid it altogether. Be diligent and do the proper research before buying a policy.