Can life insurance companies refuse to pay if information is withheld?

When I applied for life insurance many years ago I left out the fact that I had early stage cancer because I would have been denied life insurance. I understand that if I died of cancer my family would not receive the insurance benefit. But what if I was hit by a car or something? Would the life insurance still not pay the benefit even if I died from something that was not related to cancer at all?

Hi there,

While an insurance provider has the right to terminate your policy if they discover that you withheld requested information when applying for insurance, the insurance provider is still required to pay the benefit if there is absolutely no connection between the withheld information and the incident which led to the claim.

In your case, your beneficiaries should be able to claim your life insurance benefit if your death cannot in any way be linked to your illness. However, there is a risk of a connection being made between your illness and the actual cause of death. Disputes about claims can be mediated by the insurance Ombudsman (find the Ombudsman website here).

As a general rule, it is important to answer all questions truthfully when completing an insurance application.

Best regards from Moneyguru

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