What Disqualifies a Life Insurance Policy? Find Out Now

Published by:
Deepa Kruse

Reviewed by:
Alistair Vigier
Last Modified: 2024-05-16
Are you wondering what disqualifies a life insurance policy in BC? Life insurance coverage is one of the more common types of insurance coverage.
This may be through a personal plan they obtained and went through an underwriting process, including answering specific application questions and undergoing a paramedical exam.
Or, as is more common, as part of a group insurance package provider through an employer as a benefit to forming part of a remuneration package. Many people believe that if the unthinkable happens and they were to die, their loved ones would be financially cared for as beneficiaries of their life insurance policy.
Reasons for Life Insurance Payout Rejection in British Columbia
As with all policies insurance, life insurance policies get denied more often than you might think, resulting in no payout of life insurance benefits to the beneficiaries under the policy.
While the laws regarding the specifics can differ depending on the jurisdiction, the legal structure around life insurance and the payment of life insurance benefits is generally the same in much of the world. In light of the international reality of insurance companies, this article will focus on the law in British Columbia.
A life insurance benefits payout may be denied in British Columbia for many reasons, but the following are among the reasons seen most often.

Life Insurance Policy Exclusions
Your relationship with your insurance company is purely contractual. Unlike other areas of law, concepts of “fairness” do not apply.
Your life insurance policy agrees to pay out insurance benefits to a designated beneficiary under the policy upon death, so long as the manner of death is covered under the terms of the policy. Your life insurance policy won’t pay out for any causes of death.
There are causes of death covered under a particular policy, and causes of death are explicitly excluded. If a person covered under a life insurance policy dies from an excluded cause of death, then the policy does not cover the death, and no benefits are payable by the insurer.
Common excluded causes of death in insurance policies
- Death caused by suicide
- Death caused by drugs
- Death caused by alcohol
- Death caused by criminal acts
- Death caused by unintentionally self-inflicted harm
- Death caused by unintentionally self-inflicted harm
- Death caused by intentionally self-inflicted substances
- Death caused by unintentionally self-inflicted substances
- By criminal acts, meaning in the course of illegal acts. If you’re robbing a bank and a cop shoots you in the head, there’s no coverage.
Unintentionally self-inflicted harm is if you climb a tree drunk and fall out of the tree, killing yourself.
If you fell off a cliff, so long as you didn’t do anything to make the situation dangerous, they likely would cover that under an accident.
They look to narrow coverage, not widen it!
While these excluded causes of death might seem straightforward, as with all things in law, the devil is in the details, and what may seem to you like a cause of death covered under a life insurance policy may be viewed very differently by an insurance adjuster representing the insurance company.
Misrepresentation or Fraud in Life Insurance Claims
Suppose your private or group insurance policy requires a paramedical examination. In that case, you will have been asked several questions which your insurance company will have used to evaluate your application for life insurance.
They will determine the risk that insuring you would entail to determine the insurance coverage available and the corresponding insurance premiums they will charge.
This process is called underwriting. If you give incorrect answers to questions posed to you during the underwriting process and then later have a claim against your policy, an insurance company can deny paying out those benefits in certain circumstances if there is a misrepresentation or fraud.
Contestability period
There is a period called the “contestability period,” which is usually the first two years of being insured under a life insurance policy. If an insured dies within the contestability period, an insurer can deny benefits if they can show there was a misrepresentation made by the insured in their life insurance application.
This can occur more often than you’d think, as few people have a perfect recollection of what they said to their doctor over the last 10 to 20 years.
The insurance company will comb through those clinical records to find any inconsistencies they can use to deny benefits due to misrepresentation. A misreporting doesn’t need to have been done on purpose, and an honest mistake is no excuse; your insurer will still be entitled to deny a legitimate claim.
Factors That Can Disqualify a Life Insurance Payout in BC
Things change after the contestability period ends. After that point, an insurance company must prove that an insured willfully intended to commit fraud on the insurance company with their misrepresentation, which is a much higher bar to meet.
While fraud is much harder to prove, it isn’t impossible and won’t stop insurance companies from denying the claim when they think they can get away with it.
As you can see, many things can disqualify a life insurance policy in BC.

Lapsed Life Insurance Policies
As discussed, at the end of the day your relationship with your insurance company is a contractual one. When broken down to its simplest form, you pay your premiums and, should you pass away, the insurance company will pay the already agreed-upon amount of money to your elected beneficiary.
The insurance company makes money from this relationship because many of its insurers pay their premiums for a lifetime without making a claim. A lot can happen in a lifetime, such as changing or losing jobs.
They can move houses, cities, or countries. Illnesses, injuries, or other life events can distract you from the daily tasks and obligations everyone deals with, including paying your insurance premiums. So why does it happen if you miss a premium payment or two?
Missed a premium payment
As with all things, it depends on your policy language, your insurer, how forgiving your insurance adjuster is and, as with most things in life, which way the proverbial wind is blowing on that particular day.
Most insurers will understand in the normal course of things. If you missed a premium payment and a claim on your policy comes in at more than $1,000,000.00, you can be sure that your insurance company will seriously consider denying the claim based on a lapsed policy for lack of premium payment.
If you believe you were incorrectly disqualified for a life insurance payout in British Columbia, some timelines apply to any legal claim. Make sure you contact an experienced insurance denial lawyer right away.
We hope you found this guide on what disqualifies life insurance policies in BC useful. Our lawyer directory helps you find lawyers in BC.
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