How To Get a Life Insurance Company to Pay Your Claim

By Lorne Marr

There are a number of reasons why a life insurance policy doesn’t pay. If you take the following steps, you can be sure to get paid when the worst scenario happens.

Step 1:

Learn as much as you can about incontestability periods. An incontestability period (usually two years) comes into force when an insured dies and the insurance company suspects that his policy application was not filled out honestly. Yes, even though medical examinations were undertaken and inspection reports were obtained, most insurance companies rely heavily on answers given in applications in order to determine whether a payout will occur. If an applicant withholds information that would have resulted in the policy being denied or less favorably rated, beneficiaries may receive nothing. However, if after the incontestability period concludes the policy is still in force, the insurance company must pay proceeds to beneficiaries – barring, of course, a clear case of fraud.

Step 2:

Be aware of suicide periods. As an independent broker specilizing in life insurance in Canada, I know that suicide periods (or clauses) work in a similar fashion. If the insured takes his own life within two years of the policy being issued, the death benefit may be forfeited.

Step 3:

Read the fine print. Policy exclusions are the other major reason that death benefits are not paid to beneficiaries. These exclusions are usually part of what we call 'fine print'. So be sure to read this. Any number of policy exclusions might be included in a life insurance policy, but the main ones are those pertaining to war, hazardous activities or restricted countries.

Step 4:

Avoid dangerous activities. Insured individuals who are accidentally killed by an act of war or in the line of duty as soldiers will normally not be eligible to receive a payout. Those who take part in activities such as skydiving, bungee jumping or acrobatic flying may also have their death benefit withheld. And those who travel to, and are injured or die in “restricted countries" may also find their benefits either restricted or withheld entirely.

It pays to understand your contract in its entirety – terms, conditions, limitations and exclusions – before you sign.