If you hold a life insurance policy of certain amount that doesn’t mean that the life insurance company gives you the guarantee of paying that amount in any circumstances. There may arise 7 such cases where the insurance company doesn’t pay out.
This clause is mainly an incontestability clause under which the insurance company will not pay if you commit suicide within the period of one to two years. There are cases when people take the policy of large amount and then commit suicide for the sake of family’s financial gain. In this case, suicide clause comes into effect and company doesn’t pay. For more information, you may refer Moneral.fi.
Smoking or another health-related issue
If you have past smoking habits or high blood pressure, then you have to mention them clearly on your original application of the policy, failing which company may refuse to pay. The clause of material misrepresentation or withholding information intentionally also applies here.
Life insurance policy is all about risk management. You need to be honest about your hobbies and lifestyle that are dangerous. Even if you are actively involved in those kinds of activities, you can still take life insurance by making payment for the protection.
In this case, you have to mention in the application otherwise if you die while doing any illegal activity, the life insurance company will refuse to pay.
Act of War
The exclusion of act of war is found in some life insurance policy. The company refuses to pay the claim if the civilians are killed in war or the act of war.
Living or moving outside the country
If you move to another country, then the insurance company denies the claim. There may be clause excluding the payment of death benefit, but that should be mentioned in the contract where there are high chances of moving out of the country.
Honesty is the best policy in the life insurance company. At the time of investigation of the death, the company will not pay if you have not mentioned the fact in the application.