When Does Life Insurance Not Pay Out?

What disqualifies life insurance payout? 

Life insurance ensures the financial security of your dependents in case of your death. But life insurance does not payout in all situations. Below are the reasons an insurance company rejects the claim of a beneficiary:

Concealment of essential information

Concealment of vital information from the insurance company results in the non-payment of benefits. Fraud or non-disclosure of the details is the primary reason life insurance does not payout. So the applicant must state all the facts without distortion.


The average life expectancy in the United States in 2020 was 77.8, down a full year from 2019. (Npr.org, 2021) 


Lying about your health may help you secure life insurance cheaper. But in the longer run, it will not serve your cause.  As well as, the beneficiary may not get any reward for your labour. Ensure that you disclose all the details about your hobbies.

If you die while indulging in a dangerous hobby your insurer does not know about; life insurance may not payout.

Outliving the policy term

Life insurance does not payout if you outlive your policy term. It does not happen in the case of whole life insurance. But with term life insurance, you get protection for a specified period. If you survive that period, you don’t receive any benefits.

Lapse of insurance policy

If your insurance policy lapsed and you died without reinstating it, the insurance company will not payout.  As well as, Insurance policy lapses on the non-payment of the premium. You have a grace period of 30 days to settle your liability.


Ethos Life Insurance Value Estimator




Life insurance does not payout if you commit suicide. By committing suicide within the first two years of the policy, you void the life insurance. In such a case, the beneficiary may not get any death benefits.

When life insurance pays out?

If you die a natural death or expire in an accident, your beneficiary gets the death benefits. Following are the instances when life insurance does payout:


If you die an accidental death, your family receives the death benefits. An unexpected death can result from a car accident, drowning, or other tragedy.

Death from COVID-19

The death resulting from COVID-19 is considered a natural death. So, the beneficiary will receive the benefits if you die from the pandemic. But for this to happen, you need to have an insurance policy beforehand.

If you get a new insurance policy during the pandemic and lie about your physical health, it will prove disadvantageous. However, the life insurance company will deny the death benefits on discovering the truth.




If you get murdered, the life insurance pays out to the named beneficiary. But not in the case the beneficiary murdered the policyholder.

Natural death

If you die a natural death, the insurance company is liable to pay death benefits. However, natural death can result from old age, infection, or a stroke.

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When Does Life Insurance Not Pay Out?

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