5 reasons why your financial protection claim could be rejected, and what you can do to avoid it

While insurers do tend to pay out the majority of financial protection claims, there are times when they can be rejected.

In fact, the Association of British Insurers (ABI) say that, in 2021, 98% of claims for life insurance, income protection, and critical illness cover were paid, so it is a rare occurrence that your claim will be rejected. Though, if it does happen, this could leave you or your family financially vulnerable at a time when you’re most in need. 

Frustratingly, many of the reasons you could be rejected can be easily avoided. So, here are five reasons why your financial protection claim could be rejected, and the steps you can take to prevent the chance of it happening to you. 

1. Giving insurance providers incorrect information

When you take out protection, one of the most important steps is to ensure that all the information you provide on the proposal form to your insurer is correct. 

Even things that initially seem unimportant, such as spelling mistakes on your paperwork, could result in your information being misconstrued and your claim being rejected as a result.

When you are filling out your paperwork, you should ensure that information such as your name, age, smoking habits, income, and more are all correct before submitting it to the insurer. 

2. Not disclosing pre-existing diseases or illnesses

As well as filling in your paperwork correctly, you should make sure that you disclose any pre-existing illnesses and medical conditions you have. This is especially important if you’re applying for life insurance, income protection, or critical illness cover.

The ABI say that “non-disclosure” is the main reason why an individual protection claim would be rejected.

By not disclosing a pre-existing condition, you could run the risk of not receiving a payout when you or your family need it most. 

The same goes for your lifestyle habits, such as smoking. If you don’t disclose the fact that you’re a smoker and it’s later discovered that you were at the time of your application, your claim may be rejected. This is especially the case if you end up getting an illness as a result of smoking. 

Even though you may pay higher premiums if you have a medical condition or unhealthy lifestyle habit, you should always be truthful and transparent with your insurer when applying for protection to ensure you receive your payout when it’s needed most. 

3. Your protection doesn’t cover what you thought it did

While protection provides cover for a whole range of scenarios, not every policy covers everything. 

For example, critical illness cover may not offer protection for all types of cancer – indeed many types of skin cancer would typically not be covered under this type of protection.

This is why it’s essential that you fully understand the terms and conditions when you apply for protection to ensure it will provide adequate levels of cover should the worst happen.

You should thoroughly read through the policy document as it will likely contain all the relevant information you need to understand your cover, such as the features of your protection, inclusions and exclusions, exemptions, and more. 

Most importantly, if you don’t understand some of the terms and conditions of your cover, it’s vital that you ask your insurer before you make a claim. 

4. Failure to inform your insurance provider about incidents on time

When you have an incident that you want to claim for, you’re typically given a stipulated period in which you need to inform your insurer. If you don’t, your claim could be rejected. 

When an incident occurs, you (or your family in the event of a life insurance claim) should inform your insurance provider as soon as you can to have the best chance of your claim being successful. 

Many insurers will give you sufficient time to make a claim should this be an issue – for example, if you’re hospitalised and wouldn’t be able to do so immediately. 

If you can’t inform your insurer on time, one solution is to select a nominee or authorised person to make the claim for you. 

5. Your policy has lapsed due to non-payment of premiums

You may also find that your protection claim could be rejected if you fail to pay your premiums and your cover has lapsed.

Life often gets the better of us, and sometimes it’s easy to forget about paying your premiums when there’s a lot going on. But, if you need to make a claim and find that your cover has lapsed, then it will likely be rejected.

Potentially the best solution to this is to set up a direct debit that pays your premiums automatically. This way, you can rest assured that your cover won’t lapse and will be there for you when you need it most.

Get in touch

If you need help finding the right financial protection, or can’t decide which level of cover would best suit you, then we can help. Please get in touch to find out more.

Please note:

This blog is for general information only and does not constitute advice. The information is aimed at retail clients only.

Note that life insurance plans typically have no cash in value at any time and cover will cease at the end of the term. If premiums stop, then cover will lapse.