Reasons Life Insurance Won’t Pay Out

Find out some of the reasons life insurance policies may not pay out here with Savvy.

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, updated on July 10th, 2023       

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Life Insurance Banner - Upset woman on the phone after life insurance didn't pay out

Life insurance is a crucial safety net for families and loved ones in the event you pass away, are permanently disabled, fall ill or suffer a serious injury. However, not all claims are paid out by insurance companies. As such, it’s important to understand the reasons why a life insurance policy may not pay out.

If you're considering taking out a life insurance policy, it's important to know what to look for to ensure that your loved ones are protected in the event of your death. You can find out more about life insurance, its exclusions and some of the reasons why it may not pay out upon your death right here with Savvy.

What are some of the reasons why life insurance won’t pay out?

There are several key reasons why a life insurance policy may not pay out upon the policyholder’s death. These include:

Death not covered by the policy

Life insurance policies generally exclude certain causes of death, such as those resulting from war, criminal activity or illegal drug use. Death resulting from participation in certain activities such as extreme sports may also be excluded.

However, a blanket rule isn’t applied to these causes of death. For instance, while a life insurance claim can be denied for illegal drug use, a death as a result of medication prescribed by a medical professional and used as instructed can be paid out (subject to your insurer’s terms and conditions). It’s important to read your policy’s documents carefully to ensure the cause of death is covered.

Premiums unpaid and policy lapsed before death

If the policyholder hasn’t paid their premiums, their policy may lapse, which may mean the insurer is no longer obligated to pay out any benefits. It’s important to ensure that premiums are paid on time to avoid lapses in coverage. Most insurers will enable you to set up a direct debit so you don’t have to worry about remembering to pay your premiums each month or year.

Suicide within the exclusion period

Most life insurance policies have an exclusion period for suicide, which is typically 13 months from your policy’s purchase. If the policyholder dies by suicide during this period, the insurer won’t pay out any benefits. After the exclusion period has ended, the policy will typically cover suicide.

If you’re experiencing thoughts of suicide, it’s important to speak to someone. You can use one of the following free resources to chat with someone about how you’re feeling:

Undisclosed pre-existing condition

If the policyholder fails to disclose a pre-existing medical condition on their application which leads (or contributes in some way) to their death, whether that be a physical or mental illness, the insurer may not pay out any benefits. It’s important to disclose all relevant medical conditions on the application to avoid any issues with claims in the future.

Term of the policy was completed

If the policy’s term has ended and the policyholder didn’t renew or convert it, the insurer isn’t obligated to provide any coverage and thus pay out any benefits. It’s important to review the policy terms and conditions to ensure that you’re aware of when your policy term ends and what options are available for renewal or conversion.

Will life insurance pay out if I die right after buying my policy?

If you pass away right after buying your life insurance policy, your provider will generally pay out the death benefit to your nominated beneficiaries, provided all of the following requirements are met:

  • You provided accurate and honest information during the application process.
  • The cause of your death was not excluded by the terms and conditions of your policy.
  • You’ve made your first premium payment and your policy is in force at the time of your death.

It's important to note that some life insurance policies have a waiting period before the full death benefit is payable, usually around 30 days. This means that if you pass away during the waiting period, the benefit paid to your beneficiaries may be limited to a refund of the premiums paid.

As mentioned, if you have any medical conditions at the time you decide to buy your life insurance, it's important to disclose them during the application process, as withholding this information could lead to your policy being voided or a reduced benefit being paid out.

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Compare life insurance policies side-by-side

Through Savvy, you can consider a range of competitive life insurance policies from reputable insurers, whether you're after life, income protection, trauma or TPD cover. Get the ball rolling on comparing your available options today!


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Savvy does not compare all life insurance policies or providers currently operating in the market. Any advice presented above or on other pages is general in nature and doesn’t consider your personal or business objectives, needs or finances. It’s always important to consider whether advice is suitable for you before purchasing an insurance policy.

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