Advice & Tips

5 Reasons Why Life Insurance Payouts May Be Delayed

The main reason why individuals opt to take up a life insurance policy is to ensure that their dependents are not financially disadvantaged by their demise. This translates into a certain peace of mind that makes you sleep better. Consequently, payouts become claimable as soon as the insured dies and in most cases, payments are rarely disputed. But, before we delve into the reasons why a death claim may not be paid, let us look at the different classes of life assurance available.


A term based policy has a limit of between 10, 20, and 30 years and it comes up for payment as soon as the term expires whether the insured is alive or dead. This option is also tagged with other benefits such as mortgage and credit life all of which carry a death benefit that pays off loans and mortgages upon the death of the life assure. With this in mind, the beneficially is better off knowing the full extent of the life cover because the proceeds can preserve a house or other valuables.

Whole life

This class of life assured is designed to last throughout the lifetime of the insured and it is only payable upon death. However, it accrues interests that adds up to the policy value. It also has a loan option that can be taken by the insured anytime after the policy has been in force for a pre-stipulated time. Consequently, all loans are deductible from the maturity values upon the death of the insured.

That being said, there are instances where a claim may be delayed or declined and to understand the reasons for these scenarios read on.

Premiums had not been paid up to date

Insurance contracts are based on the premise that premiums will be dutifully paid periodically for the cover to remain in force. However, if the insured forfeits some of the premiums, the contract becomes void and the policy falls into lapse status. For this reason a lapsed policy cannot be paid upon death.

The insured lied on the application

A wholesome health disclosure is expected when filing out insurance proposal forms, however, if material omission occurred or the insured lied about his health history, the claim may be denied or benefits recomputed in view of the new information.

Manner Of death was not covered

Almost all insurance companies do not cover self-inflicted deaths such as suicide or a death that occurred when the insured was committing a crime. On the other hand, if the insured was murdered, death payouts may be delayed for between 6 to 12 months awaiting full investigation into the matter. This delay is the time taken to ascertain that the beneficially has been cleared of any involvement as a suspect.

Death within the first 2 year after the policy was issued

There is a contestability clause which stipulates that a claim within the first 2 years must be cleared of all fraud suspicions before it can be paid. Delays of up to 6 months are not uncommon when the insured dies shortly after taking up the policy.

Incomplete paperwork

To process a death claim, certified copies of the death certificate, policy document, and proof of the named beneficially as well as filled claim forms are required to be submitted to the insurance company. This can be done through the deceased’s agent or directly to the company. In the absence of these requirements, payments can never be made no matter how much time lapses.

However, In the event that the deceased does not have any paperwork showing the number of policies he was holding, the state department is the main custodian of all unclaimed assets and policies. This is a good place to start when a beneficially needs help claiming a death policy.

To wrap up, it is of utmost importance to have a life policy and more importantly for your defendants to be able to claim the benefits when you are gone. To this end, let your defendants know where all the documents are kept and the companies that you are insured with. Disclose all material facts from the onset and you are set for life.

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