Reasons life insurance won't pay out

Reasons could include an application error, a lapse in premium payments, incorrect medical history information or mistakes when naming a beneficiary. Here, we'll explain more about what disqualifies a life insurance policy from being paid out and how to avoid oversights that would cause a denied life insurance claim.

Why won't life insurance pay out?

The most common reason life insurance doesn't payout is that the policyholder outlives their term life insurance policy. This type of insurance protects you for a fixed number of years. If you don't die within the term, your insurer won't payout.

What percentage of life insurance policies are never paid out?

Because policyholders can outlive their policies, there's a chance that the death benefit will never be paid out. In fact, a study done by Penn State University indicates that 99 percent of all term policies never pay out a death benefit.

What can cause life insurance to be denied?

People are typically denied life insurance because they fall into a high-risk category. This is often due to health challenges like diabetes, obesity or a previous diagnosis of serious disease. There are also nonhealth reasons for being denied life insurance.