When a life insurance policy pays
A term policy pays the agreed sum if the person covered dies before the end date. A whole of life policy pays whenever death happens, as long as the premiums are kept up. Many policies also pay early if you are diagnosed with a terminal illness and expected to live less than twelve months.
For the claim to succeed, three things need to line up. The policy must be in force, the information on the application must be accurate, and the cause of death must not fall under an exclusion. Get those right and your family is in a strong position.
The insurer checks a claim against the answers you gave when you applied. For a recent policy, or a large sum, it may look at medical records in some detail. That check is routine and nothing to fear if you answered openly, so the work you put in on day one pays off years later.
Non-disclosure: leaving things out of the application
When you apply, the insurer asks about your health, lifestyle, smoking and job. UK law requires you to take reasonable care to answer these questions fully and accurately. If you leave out a condition or misstate something, and the insurer would have offered different terms had it known, it can act when a claim comes in.
What happens depends on the reason. If the mistake was deliberate or reckless, the insurer can refuse the claim and keep the premiums. If it was careless, the insurer will usually adjust the payout to reflect the terms it would have offered. An honest error that a reasonable person would have made should not cost your family anything.
- Mention every condition the questions ask about, even if it seems minor
- Include medication, tests and referrals you are waiting on
- Be precise about smoking, vaping and alcohol
- Check your answers before you sign
Lapsed policies and missed payments
If premiums stop, the cover stops. Insurers usually allow a short grace period after a missed payment, but if the arrears are not cleared, the policy lapses and nothing will be paid on a later death. This can happen without anyone meaning it to, for example after changing bank accounts and forgetting to move the direct debit.
Keep your insurer up to date with your address and bank details. If money is tight, talk to your insurer or your broker before you stop paying. Reducing the cover can be a better option than letting the whole policy go.
Restarting a lapsed policy is not always possible. Some insurers will reinstate cover within a short window if you pay the arrears and confirm your health has not changed. After that, you would need to apply again at your current age, and any new health problems would count.
Exclusions and what the policy covers
Every policy sets out what it will not cover. Many include an exclusion for suicide within the first year. Some add exclusions on individual terms, such as a dangerous hobby or a particular medical condition you disclosed. These are written into your documents, so you know about them from day one.
Read your policy summary when it arrives and ask about anything that is unclear. If an exclusion worries you, an adviser may be able to find an insurer that offers cover without it, perhaps at a different price. Tell your family where the documents live, too, so they know what the policy says if they ever need it.
How Hi Tomorrow helps your family's claim stand up
We go through the application questions with you and explain what each one is asking, so nothing important gets missed. If you are unsure whether to mention something, we help you put it on the form clearly. That care at the start is the best protection for any future claim.
If the worst happens, your family can call us. We help them gather what the insurer needs, deal with the paperwork and keep the claim moving. If an insurer declines a claim and your family disagrees, we explain how to complain and how to take it to the Financial Ombudsman Service.