Contestability of Claims

• All insurance policies contain a contestability provision which states that the insurer can refuse to pay a claim if the insurance applicant did not disclose something that was important to determining a person's eligibility for insurance. If a claim is made during the insurance policy's contestability provision time period, the claims department carefully investigates the claim to determine if the applicant failed to disclose information important to their ability to obtain insurance.
  
  

Terrorist Financing

• The U.S. Treasury keeps track of countries, individuals and organizations that either sponsor terrorists or are terrorists themselves. Before paying a claim, the insurance company runs a check to ensure they are not paying insurance policy proceeds to a terrorist or terrorist organization.
  
  

Insurance Fraud

• Insurance companies also check claims for claim fraud. Claim fraud is when a person supplies false information to the insurance company in order to collect the insurance policy proceeds. Insurance companies can refuse to pay a claim at any time if they suspect insurance fraud.
  
  

Disappearance of Insured

• Sometimes a person insured under a life insurance policy disappears. When the beneficiary tries to submit a claim, they are unable to provide proof the insured person is dead as there is no death certificate for the insured. In this case, the insurance company will not pay the insurance policy proceeds unless the insured person has been missing for 7 years, the absence is unexplained, a reasonable search has occurred and there has been no communication with the insured person.
  
  

Beneficiary Kills Insured

• An insurance company may face a situation where the person who submits the insurance claim kills the person insured under the policy. Since it is against the law to profit from a murder, the insurance company will not pay policy proceeds to a beneficiary if they have killed the person insured under the insurance policy.