Life insurance policies can serve a really important purpose as part of someone’s estate planning, but there is also a real risk that a policy could be invalidated. Laura Richardson explains . . .

Most people take out life insurance policies to ensure that their loved ones will be financially provided for should the worst happen. The good news is that, according to the Association of British Insurers, 98% of life insurance policies payout as planned. However, it is important to make sure that you are aware of these common reasons for life assurance pay-out being denied in the UK:

  • The most common reason that a life insurance pay-out is denied is that incorrect information was given on the initial application. This can range from non-disclosure of medical or relevant facts to outright fraud! Honesty is therefore quite literally the best policy!
  • Most policies will pay out for suicide if the policy was taken out more than 12 months previous to the suicide. However, some life insurance policies may still be invalidated if there was an ongoing mental health issue that was not previously disclosed.
  • Failing to name a secondary or alternative beneficiary. If your named beneficiary dies before you and you fail to change your life insurance policy details, then this could mean that the policy does not payout.
  • Failing to tell your insurer of a change such as marriage, change of employment, or the birth of a child. It is advisable to update your life insurance policies following any major changes and ensure that the policy cover remains suitable for your requirements.
  • Outliving your policy. Some life insurance policies only cover you for a fixed amount of time. This type of policy is usually taken out alongside a mortgage to ensure that should the worst happen, your loved ones would be able to keep up mortgage payments, or even pay off the entire mortgage. Should you live longer than the policy length the policy will no longer be valid.
  • If you live or travel outside of certain areas for more than 12 consecutive months you will need to inform your insurance provider as this can also invalidate your life insurance policies.
  • Should you be diagnosed with a terminal illness you may be able to claim an early pay-out depending upon the terms and conditions of your policy. However, this would then mean that there would not be a pay-out upon your death.

If you would like to take out life insurance policies and wish to avoid the common pitfalls, it is highly advisable to consult with an experienced insurance provider such as our trusted partner firm at Andrew Douglas Wills & Legal Services.

Our trusted partner firm can offer a range of policy options tailored to your exact requirements to give you the peace of mind that your loved ones will be financially cared for after you die. To arrange your free initial consultation, whether in Braintree or the surrounding areas of Essex, contact Andrew Douglas Wills & Legal Services today!

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