The 5 Most Common Mistakes That Can Void Your Life Insurance Claim

Securing a life insurance policy is one of the best ways to ensure your family’s financial future after your passing. However, even with a policy in place, certain mistakes could prevent your loved ones from receiving the payout they deserve. Regardless of the type of life insurance you have, be mindful of these five common mistakes that could jeopardize your life insurance claim.

1. Providing False Information on Your Insurance Application

It may be tempting to omit specific details on your life insurance application to secure lower premiums—such as smoking habits or past medical conditions. However, dishonesty can have serious consequences. If an insurer discovers a discrepancy, otherwise known as a “material misrepresentation,” they can deny your life insurance claim or void the policy altogether, leaving you and your beneficiaries with nothing.

Most policies include a two-year contestability period. A contestability period is a dedicated length of time the insurer conducts a detailed investigation on an application. The insurer can deny coverage to the applicant if they uncover false or misleading information. In cases of outright fraud, a claim may be denied coverage even after this period. To ensure your policy remains valid, always provide accurate information.

2. Letting Your Policy Lapse Due to Missed Payments

Missing a single payment won’t immediately cancel your policy—most insurers offer a 30- to 60-day grace period. However, if you fail to catch up within this timeframe, your coverage may lapse, leaving your beneficiaries without protection.

Some permanent life insurance policies allow unpaid premiums to be covered using the policy’s cash value. However, for term policies, reinstating coverage after a lapse may require a new medical exam, potentially leading to higher premiums—or outright denial. To avoid this risk, consider setting up automatic payments or reminders to ensure your policy remains active.

3. Failing to Inform Your Beneficiaries

A life insurance policy is useless if your loved ones don’t know it exists. While some insurers proactively check databases to identify deceased policyholders, this process isn’t always reliable. As a result, unclaimed death benefits sometimes go unnoticed for years.

Currently, no federal laws mandate insurance companies to locate beneficiaries, though some states have passed regulations requiring insurers to take reasonable steps to identify and pay them. To prevent delays or lost benefits, ensure your beneficiaries know about your policy and how to access it after your passing.

4. Neglecting to Name Contingent Beneficiaries

It’s crucial to name a secondary and even a final beneficiary in case your primary beneficiary passes away before you. Without designated contingent beneficiaries, your policy’s proceeds could be directed to your estate, potentially leading to a lengthy probate process. This scenario could delay the payout and reduce the amount your loved ones receive due to estate taxes or legal fees.

Regularly review your beneficiary designations, especially after major life events like marriage, divorce, or the birth of a child, to ensure they remain up-to-date.

5. Engaging in Risky Activities or Suicide

Most life insurance policies include a two-year exclusionary period, during which suicide claims typically result in a refund of premiums paid rather than a full payout. This clause helps prevent individuals from purchasing policies with the intent of immediate financial relief for their families.

Additionally, if you engage in high-risk activities—such as skydiving or motorcycle racing—without disclosing them during your application, your insurer may deny a claim if your death results from such activities. Always be transparent about risky hobbies to avoid complications for your beneficiaries.

Secure Your Family’s Financial Future

To ensure your loved ones receive the financial protection you intend, avoid these common life insurance claim mistakes. Work with a trusted insurance agent to navigate the application process and regularly review your policy to keep it current. By staying informed and proactive, you can provide peace of mind and security for those who matter most.