3 Occasions When Life Insurance Might Not Pay Out

A life insurance policy seems like a straightforward idea, existing to provide a lifeline to your family in the darkest of times. Occasionally, however, there are circumstances when insurance companies may not pay out, leaving your family bereft of the support that they might desperately need. Though it should be, making an insurance claim is not always as easy as simply talking to your company after a life-changing event. There are often other factors that the insurance company will also consider that may impact the size of your payout. So, before you rush off to your nearest insurance company, take a moment to consider these events in case they might be applicable to your situation.

Suicide

Policies often have very strict rules on paying out when a death happens due to suicide. In Singapore, the rule of thumb is that if the insured commits suicide within a year of the date of commencement of a term life insurance policy, or two years of a life insurance policy, the payout is voided. It is tragic when someone chooses to commit suicide, and it can be even more difficult for the family to potentially be left without their breadwinner and be without this safety net. 

Fraud

The start of any policy begins with a window known as the period of contestability. During this period, companies will investigate any claims made to determine if false information was given on the application. Payment of benefits will be denied if you lied, and may be denied even if the cause of death has nothing to do with the misrepresentation on the application. Fortunately, most Singaporean companies include an incontestability clause after the probationary period which prevents them from denying payout due to misrepresentation.

Non-payment of premiums

If there is a lapse in payments for your life insurance in Singapore, your insurance company will usually give you a short grace period before terminating your policy. This period may be anywhere from 15-30 days, and companies will usually keep the policy in effect through the period. But once the period lapses, your policy will be cancelled. Depending on the circumstances, paying off outstanding premiums will allow the continuation of your policy. This is not always guaranteed and while there are outstanding payments, be aware that you will not enjoy any benefit outside of the grace period if anything unfortunate should happen.

While not a comprehensive list on the obstructions you might face while making a claim, these are perhaps a few of the more important clauses you should always be aware of. Whether you purchase a term life insurance or a life insurance policy while here in Singapore, always do your best to perform a thorough research on all the available options.

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