Is Your Life Insurance Payout 100% Guaranteed?

Life insurance is an integral part of long term financial planning. It’s a way to protect your loved ones and provide them with financial support if you pass away. It can be very helpful to pay off any debts, save for young children’s college costs, or assist with day to day expenses. Although life insurance is generally a solid investment, some situations will cause a policy to become void and not pay the benefit.


When someone enrolls in a life insurance policy without providing relevant information, it’s called concealment. A common form of concealment is when the insured hides the fact that they are a smoker. Hiding a smoking habit will result in a lower premium; however, smoking increases the risk of lung-related health conditions. If the insured dies of a smoking-related illness, the insurance may not pay the claim because the smoking habit was not disclosed. 

Criminal Activities 

If the insured dies while engaging in illegal activities, the claim may not be paid. For example, if someone robs a bank and they’re shot and killed, the policy could be rendered void. Or if someone breaks into a home and the homeowner kills them, the insurance may not pay out.


It is a common belief that insurance policies do not pay out for suicide, but this isn’t completely true. In some instances, there’s a life insurance suicide clause in effect for a specific time frame, such as two years. If the insured commits suicide after those two years, the claim may be paid. This time frame was put in place to prevent people from purchasing a policy and immediately committing suicide. 


Concealment is a type of fraud, but another example is explicitly lying in your insurance application. When you’re applying for life insurance, truthfulness is essential. The insurance company will be checking to confirm that all of the information is accurate. If they don’t find false information when you open the policy, they could find it after a claim is filed, and it will be denied. An example of this is forging a policy or unauthorized changes to the policy.

Lapsed Coverage 

Making all of your life insurance policy payments on time is critical. If you miss a payment, your policy will lapse, and that means that it’s no longer active. Any claims against a lapsed policy will automatically be denied. Most insurance companies have a grace period after the payment due date has passed. As long as you make the payment within the grace period, the policy is still valid.

Unnamed Beneficiary 

When a life insurance policy is purchased, it’s vital that the insured names the beneficiary of the policy as soon as possible. If there isn’t a beneficiary, the laws differ by state. In some states, the benefit is paid to the next of kin; in others, it will go to the estate. An unnamed beneficiary could cause the payout to become tied up in litigation for a long time. 

High-Risk Activity

Certain activities could void a life insurance policy; activities such as mountain climbing, bungee jumping, or car racing are considered risky. There is specific insurance available for people that enjoy these types of things, but the premiums will be higher. If the insured dies while participating in a high-risk activity, the insurance company may deny the claim if the information wasn’t included in the policy. 


Life insurance is a valuable asset, as long as you follow the policies and procedures of the company issuing the policy. Be honest and transparent when applying for a policy. Make sure that you include all of the relevant information, and if you’re not sure, it’s best to ask. The financial security of the payout can make the difference for those left behind. It is best to do everything possible to make sure it gets to them.