Do you know there are cases where your life insurance company would not pay your claims to your loved ones? We have outlined some of the reasons that might prevent you from cashing out your life insurance claims.
If you are living outside of the US, that is enough reason for you not to get your life insurance claim. Unfortunately, not many people discover this on time as it is hidden in the fine print. Besides, even if you started your life insurance policy in the US, there could be special provisions that exclude the payment of your life insurance benefit if you are staying outside the country.
Dying within the contestability period
Most life insurance policies have contestability periods that typically lasts for two years. If you take a life insurance policy and die within those two years, your insurer can investigate if your death was planned or natural. Even though this act might seem inhumane, it serves to protect the life insurance companies from people who might want to defraud them to benefit their families.
Lying on your life insurance application
Not being honest while filling out your life insurance application can prevent your dependents from receiving your life insurance claims. Therefore, do not fail to disclose any relevant personal information or hide your health issues. Otherwise, if your life insurance company discovers a single lie on your application, they have a right to withhold your claims
Allowing your life insurance policy to expire
Every life insurance policy comes with an expiration date. And after this expiration date, an extra day of grace is added for those who choose to extend their life insurance policy. However, if you leave the term on your life insurance policy to expire and you do not extend it, you automatically lose the right to receive a claim. And it is virtually impossible to restart it again.
Hiding your smoking habits
Smoking is one vice that adversely affects the long term health of a smoker. And most life insurance companies will love to know about your smoking habits and your health status so they could classify you as either high risk or low risk. If your life insurance company investigates your death and discovers your smoking habit, your loved ones would be denied your claim.