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When does life insurance not pay out?

The two year contestability period, the suicide clause, false answers on the application, and lapsed premiums. Why claims get denied and how to avoid each one.

Updated September 5, 2026 · 2 min read · by Gerino Alejos

Life insurance claims are paid the overwhelming majority of the time. When one is denied, it is almost always for a reason that existed on the day the policy was bought. Here are the ones that matter.

The contestability period

For the first two years after a policy is issued, the company can investigate a claim. It can review the application against your medical records. If it finds a material misstatement, a false answer that would have changed whether it issued the policy or at what price, it can deny the claim or reduce the benefit.

After two years, the policy generally becomes incontestable. That means the company can no longer challenge it except for outright fraud. That two year line is why replacing an old policy with a new one carries a cost of its own.

Misrepresentation on the application

Misrepresentation, a false or incomplete answer on the application, is the leading cause of denials. Tobacco use is the most common one. Conditions left out and alcohol use understated come next. The prescription database and medical records usually surface it. If you are unsure how to answer a question, tell your agent and answer it fully rather than guessing at what sounds better.

The suicide clause

Most policies exclude suicide during the first two years and return the premiums paid instead. After that period, the death benefit is generally paid.

Lapsed coverage

The simplest denial of all. A policy that lapsed, meaning it ended because the premium went unpaid, does not pay. Most policies include a grace period, usually 30 or 31 days, when a late payment still keeps the policy alive. Many can be reinstated within a few years if you show evidence of insurability, which means proving you are still in good enough health.

• Set the premium to draft automatically from your bank account
• Name a secondary addressee, so a lapse notice also goes to an adult child or spouse
• If money gets tight, call the company before the policy lapses, because there are usually options

Exclusions written into the policy

Some policies exclude specific activities, or carry an exclusion for flying or for a dangerous job. Accidental death policies, which are not the same as life insurance, exclude nearly everything except accidents. Read what you own.

What almost never causes a denial

Dying of a condition you disclosed. Dying overseas. Dying in an accident. Changing jobs. A policy bought with true answers and kept in force does the job it was built for.

We will review what you own

Bring your policy and we will check the in-force date, the riders and the payment status. Call our McAllen office at (956) 687 3334, or use the ZIP form on this page. Se habla español.

Rather talk? (956) 687 3334

How much should it pay?

The death benefit is what your family receives. Most final expense policies here run between $5,000 and $25,000.

Coverage amount

$10,000$15,000$20,000$25,000Not sure

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Licensed Texas insurance agency Local office in McAllen We don’t sell your information

Gerino Alejos

Licensed insurance agent · License 3128710 · NPN 18243381

Owner of McAllen Insurance Group, an independent agency on North 10th Street in McAllen. Works with clients across Hidalgo, Cameron and Starr counties on Medicare, Marketplace health, life and auto coverage. Se habla español.