Is Life Insurance Guaranteed To Pay Out?

There are many considerations when choosing life insurance. One that cuts across the board is whether the policy guarantees a pay-out.

The answer to this concern is NO. Life insurance does not guarantee a pay-out, however, the likelihood of one receiving a pay-out is pretty high. Indeed, recent studies show that the UK life insurance industry has an average percentage pay-out rate of 97.4%.

Life insurance is a contract between the insured and the insurer. Like any other contract, there are terms and conditions that both parties need to adhere to. Failing to honour these terms may result in you or your family losing out on the claim.

In this quick guide, we’ll explore some of the factors that determine whether life insurance will pay or not.


Certain policies lay out specific reasons that qualify a claim for a pay-out. A good example of this is life cover with critical Illness.

This policy outlines conditions or illnesses that qualify the insured for a pay-out. Besides specifying the illnesses covered, it also states the severity that qualifies one for a claim.

The advantage of taking out this policy is that successful claims are paid in a lump sum to the insured. Further, the insurer does not dictate how the benefit is to be spent.

Further, some of these policies are flexible and may cover more conditions at an additional fee. Always ensure you speak to your insurer about your options.

Term life policies

There are different types of life insurance. Some cover you until death while others have an expiry period. The ones that have an expiry period fall under term life insurance cover.

This type of insurance will only pay out during the active period of the insurance.

Lying or non-disclosure

Omitting or providing wrong information on your insurance application may result in a non-payment of an insurance claim. The most common form of misinformation on life insurance applications involves hiding details of a pre-existing medical condition or substance abuse.

Insurance companies in the UK have a two-year contestability period where they are allowed to investigate death claims. If you pass away within that period and the insurance company proves you hid a pre-existing condition, they can decline to pay. In some cases, your premiums may also be forfeited.

Missing your premiums

Failing to remit premiums promptly may void your life insurance. If you are unable to remit your premiums on time for whatever reason, ensure you inform your insurance provider on time.

Some providers offer waivers for exceptional cases such as inability to work due to an injury or incapacitation. This will ensure your insurance stays active even if you are unable to pay the premium.

However, the waiver will only be granted if you pay premiums for a pre-set period (usually 9 months) after you become unable to work. Failing to pay your premiums without giving a valid reason may lead to the cancellation of your policy and a non-payment of the claim.

Waiting period

Certain insurance policies have a waiting period of between 12-24 months. Typically, this applies to persons over the age of 50 years.

The waiting period exempts the provider from paying out a claim should the insured die of natural causes. However, premiums paid over that period are reimbursed.

The waiting period does not include deaths caused by accidents. In such cases, the provider is obliged to pay.

You can negotiate such terms with your provider, so ensure to always read the terms and conditions before signing that policy.

Suicide, dangerous activity or illegal activity

Most insurance service providers will decline a pay-out if the insured died as a result of suicide, dangerous activity, or illegal activity.

Whilst there are policies for specific deaths, including suicides, they specify a period during which a claim may be valid. In most cases, suicides occurring within the first two years of activating life insurance do not receive a pay-out.

Also, depending on the life insurance policy, deaths caused by dangerous activities such as base jumping or illegal activities may not be eligible for a pay-out.


If you are doing the right thing, which is true for most of the population, chances are very high that you or your loved ones will receive a pay-out for your life insurance. The optics are in favour of the insured. A majority of insurance providers have a 99% pay-out rate, meaning only a very tiny percent of claims do not go through.

To be on the safe side though, be sure to understand the terms of your policy and the options you have. Always keep in mind certain life insurances are better than others depending on your circumstance.

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