When will life insurance not pay out?

8 May2021

Life insurance can really help put your mind at ease about the future. With the right policy, you know your family will be protected financially during an emotionally difficult time.

It can therefore be really worrying to consider that there are factors that can prevent a life insurance policy from paying out. If you have been paying for a policy for several years, you wouldn't want to think that something could prevent your family from receiving a payout.

It can therefore help to know what kinds of things stop life insurance policies from paying out. Your family may be denied a payout if you die as a direct result of:

Participating in dangerous pastimes

Taking part in extreme sports may be seen as willingly endangering yourself. Many policies will not pay out if you die as a result of pastimes such as boxing, martial arts, yacht racing or cave diving.

Suicide

Suicide is usually not included in policies because it is always possible that people with a view to kill themselves could take out an expensive life insurance policy.

Deliberate exposure to extreme danger and gross negligence

If you deliberately put yourself in a potentially fatal situation, and die as a result, your family may not receive a payout. If you were trying to save a human life there may be exceptions to this rule.

Drug or alcohol abuse

If you die as a direct result of drug abuse (whether prescription or illegal drugs) or drinking too much alcohol, your policy will probably not pay out. This is because your death would be considered self-inflicted.

Illegal activity

If you die whilst committing a crime or taking part in illegal activity, this may void your policy.

War

You won't be covered under most policies if you die during a war-related activity. This can include uprisings and riots.

Aviation

If you die as a result of any personal flying activity, such as hang gliding or skydiving, you will not be covered. The exception to this is if you die whilst riding in a commercially licensed passenger aircraft.

Incorrect information

Another factor that could prevent a payout is if you lied or knowingly omitted important information when you applied for the policy. If you are a smoker, for example, but said you are not, this may stop your payout if your insurer finds out about it. Withholding details in order to pay lower premiums is not preferable if it stops your family from receiving support when they are at their most vulnerable.

It is essential to read the terms and conditions of your policy so you can understand what you will and won't be covered for.

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