Understandably, when someone purchases any kind of insurance there is the concern if a claim can be denied. However, there are strict laws established by the government requiring life insurance companies to pay out claims in a prompt manner and in all cases with only two exceptions. Those exceptions are as follows:
- If death is ruled a suicide.
- There was misrepresented or withheld information on the original application that would have impacted the life insurance company’s original underwriting decision.
Nevertheless, even with these two exceptions there is a limited amount of time in which a life insurance company can deny a claim. This is known as a suicide and contestability period, and it typically expires after the life insurance policy has been active for two years. In other words, if death occurred during the first two years that the policy was active, the life insurance company could contest a payout if one of the above two factors came into play. On the other hand, if death occurred after the policy had been active for two years the company could not contest a payout even if the death was ruled a suicide or there was incorrect or missing information on the original application.
Knowing this information, you can have peace of mind that if a claim needed to be made, your life insurance policy will payout promptly and completely without any other small print or exceptions to worry about.