The top 5 reasons why your life insurance claim may not be paid Posted Feb 22, 2019. Life insurance policies, in common with many other types of insurance, can often seem to have a multitude of restrictions, exclusions and get-out clauses when it comes to actually make a claim. Whilst industry data from the Association of British Insurers (‘ABI’) indicates that the 98% pay-out rate for life insurance claims looks very impressive overall, the data masks the often life-changing impact on policyholders should their life insurance claim not be paid. Life insurance policies are usually designed to pay a lump sum when you die, with some policies also providing payments in the unfortunate event of the policyholder being diagnosed with a severe or terminal illness. Whilst there are obvious concerns around the value and ultimate claims protection afforded by life insurance policies, your claim is likely to be OK as long as you avoid the following top 5 reasons for non-payment of claims: 5 main reasons for life insurance claims to be disputed 1. Concealing information and Non-Disclosure Basically, don’t try to tell lies or conceal the truth when taking out a life insurance policy. This is known as non-disclosure and is technically fraudulent, giving an insurer every reason to legitimately turn down your claim. Some cases of non-disclosure are more complicated than others; for example if you’re diagnosed with a known life-shortening condition or illness and fail to disclose this on your life insurance application form, any future claim can be justifiably refused by the provider. Honesty is the best policy here! It’s also vital to inform your insurer of any change of personal circumstances which could affect a future claim. Whilst it is unreasonable to expect policyholders to tell their insurers about everything that is happening in their lives, it is important that you inform your insurer when life’s ‘big events’ occur:- getting married, buying a house, having children, changing job, etc. It’s important that the level of cover you have in place keeps pace with such significant changes in your personal circumstances. 2. A terminal illness diagnoses With many types of life insurance, if you are unfortunate enough to be struck down with a terminal illness (defined as ‘a rapidly progressing sickness or condition, where the life expectancy is deemed to be a time no more than 12 months in duration, and which offers no known cure’) then you may not be able to make a claim, or at least not for a full pay-out. Its worth checking to see what your dependents may be entitled to in terms of a lump-sum payment as this can vary from policy to policy. There are often policy restrictions should the policyholder be diagnosed with a terminal illness within 12 months of the plan ending. In this scenario, the insurer often isn’t obliged to settle early, but only once the insured party has died. 3. Outliving the term of your policy Living beyond the pre-determined cover of your life insurance policy is one of the most common reasons for a life insurance dispute or non-payment of a claim. Life insurance typically covers you for a fixed amount of time – say, until you are 75. As long as you have thought carefully about the length of time you need cover, this isn’t usually a problem. Fixed term life insurance plans are generally used to cover the length of a mortgage and/or to make sure children have grown up, been educated and are self-sufficient before you pass away. However, increases in life expectancy mean that its important to review your life insurance cover, especially if you are getting close to the end of the term covered. 4. Taking your own life There are usually policy restrictions which mean that there will be no pay out within the first 12 months of a policy being taken out should the claim be for a suicide. Once this 12 month period has elapsed, there should be a pay-out available for the policyholder’s dependents, but there may still be issues if the insurer claims that there were pre-existing mental health issues that weren’t disclosed to them when the policy was taken out. 5. Moving abroad If you move outside the UK to live on a permanent or semi-permanent basis, check that your life insurance policy will cover this, as many do not! Such locations include outside of the European Union (although the UK’s forthcoming Brexit may well change this) as well as more distant destinations like America, Canada, Australia, New Zealand and the Isle of Man and the Channel Islands. What to do if your claim is being disputed or turned down? If you are unfortunate enough to have your life insurance claim turned down or disputed, the first is to formally contact your insurance company via their official disputes and complaints procedure. Failing this, you can approach the independent arbitrator and regulatory body, the Financial Ombudsman Service (‘FOS’). Ultimately you may need to resort to taking legal action against your insurer if your claim is being unfairly rejected. If you feel you have been treated unfairly by an insurance company please contact us today for assistance. All cases are dealt with on a no win, no fee basis. There is no upfront or unexpected costs. You can contact us by email, arrange a free consultation online or ring us on FREE on 0800 731 7284.