Will my life insurance pay out?

Life insurance is a promise to pay a set amount if you die during the policy term, as long as the policy is still in force and the claim falls within its terms. For most families who claim, that is exactly what happens.

The reasons a policy may not pay are few, and most can be avoided:

• •The term has ended. Term life insurance only covers the period you chose. If you die after it ends, there is nothing to claim.
• •The policy lapsed. If premiums stop, the insurer will usually try to contact you, but the cover can end.
• •An exclusion applies. Some policies exclude particular causes of death, either as a standard term or because of your circumstances.
• •The application was inaccurate. If information was wrong or missing, the insurer may reduce or refuse the claim.

Life insurance is underwritten when you apply. The insurer decides whether to offer cover, and at what price, based on your answers. An answer that was wrong or incomplete is the single most common reason a claim gets argued about, so this is the part that deserves the most care.

• •Include symptoms you have had, even if they have not been diagnosed
• •Include tests, referrals and investigations, including any you are waiting for
• •List medication, including anything you take only occasionally
• •Be accurate about smoking, vaping and nicotine replacement
• •Describe your occupation and hobbies as they really are, including anything hazardous
• •If you are unsure whether something counts, declare it

Under UK consumer insurance law, what an insurer can do about an inaccurate answer depends on whether it was deliberate or reckless, careless, or made reasonably and honestly. Depending on that, and on what the insurer would have done had it known, the outcome can range from paying in full, to paying a proportion of the claim, to refusing it. Answering carefully avoids the question altogether.

Declaring a condition does not automatically mean higher premiums or a refusal. Our guide to life insurance with a medical condition explains how insurers look at health.

Exclusions come in two kinds:

• •General exclusions apply to everyone with that policy. For example, most policies exclude suicide during the first 12 months.
• •Personal exclusions may be added at underwriting because of a particular condition, occupation or hobby. The insurer may offer cover but exclude claims connected with it.

Personal exclusions are shown in your policy schedule or acceptance terms. Read them when the policy starts, so you know exactly what is and is not covered, and ask if anything is unclear.

Many life insurance policies include terminal illness benefit. This can pay the cover early if you are diagnosed with an illness that meets the policy definition, commonly one where life expectancy is less than 12 months. The exact wording varies by insurer, and the benefit is usually not available in the final part of the term, so check your policy.

If you also have critical illness cover, a claim pays only when your condition meets the policy definition for that illness. Definitions can differ between insurers. Our guide to why critical illness cover is worth considering explains how it works.

A claim is normally made by the beneficiaries, the trustees if the policy is written in trust, or the executors of the estate. They contact the insurer, which will explain what it needs. Typically that includes:

• •The death certificate
• •The policy number, or enough detail for the insurer to find the policy
• •Details of the people claiming, and in some cases proof of their right to claim

The insurer may also ask for medical records to check the claim against the application. This is a normal part of the process.

If the policy was arranged through CoverLife, your family can call us on 02382 000825. We will find the policy information they need and put them in touch with the right claims team.

If the policy is written in trust, the insurer can usually pay the trustees without waiting for the estate to be dealt with, which can mean your family receives the money sooner. We can explain how trusts work when we set up your cover, or you can read our article on putting life insurance in trust.

A simple checklist

• •Keep your policy documents where your family can find them
• •Tell your family, or your executors, which insurer you are with
• •Keep premiums paid, and update your bank details with the insurer if they change
• •Review your cover when your circumstances change, such as a new mortgage or a new child

Our guide to reviewing your existing protection explains what to look for.

An adviser cannot promise that a claim will be paid, because that depends on the policy terms and the circumstances at the time. What we can do is help make sure your cover is set up properly from the start:

• •Helping you answer the application questions fully and accurately
• •Explaining exclusions, terminal illness wording and critical illness definitions before you commit
• •If your family ever need to claim, finding the policy information and putting them in touch with the right claims team

If you are deciding how to buy, see our comparison of using a broker or going direct.

As a next step, find your policy documents and read the schedule. If you are applying for new cover, or want an existing policy checked, call us or get a quote and we will talk you through the questions.