【Will It Pay or Not?】Unravelling Life Insurance Dispute Cases: Key Details Revealed

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Life insurance, though rarely excluding coverage for certain matters, does not mean there are no disputed compensation cases—some even escalate to court, with final rulings in favour of the insurance company, absolving them of the need to pay out. To understand the compensation criteria for life insurance, apart from carefully reviewing the product information, terms, and conditions of the life insurance policy, one can also refer to real-life cases. 10Life has prepared four life insurance case studies for you and consulted legal experts to present the legal disputes and technical aspects in an accessible manner. In the future, we will also analyse other types of insurance cases, so stay tuned!

Case 1: Mr. Chan purchased a life insurance policy. Six months later, he fell to his death while cleaning windows. Can the insurance company refuse to pay out on the grounds that Mr. Chan committed suicide?

Currently, most insurance companies list suicide within the first year or first two years of a life insurance policy as an exclusion (i.e., not covered). In other words, if Mr. Chan in the above case did indeed die by suicide, the insurance company may refuse to compensate. However, the burden of proof to demonstrate that the death was caused by suicide lies with the insurance company. If the deceased did not leave a suicide note or other clear evidence, it is not easy for the insurance company to prove that the death was due to suicide. If the beneficiary disputes the insurance company’s decision on compensation, they can ultimately file a complaint with the Insurance Authority for a review of the case.

Case 2: Ms. Wong purchased a life insurance policy five years ago, with her 5-year-old daughter as the beneficiary. Recently, Ms. Wong passed away in hospital a week after a traffic accident caused by drunk driving. Will the insurance company refuse to pay out on the grounds of Ms. Wong’s drunk driving?

As mentioned in our earlier articles, life insurance generally does not focus on the insured risk (cause of death), so the cause of death usually has little impact on life insurance claims. In fact, most term life insurance products on the market cover death due to AIDS, illegal activities, suicide (after one to two years from the policy’s effective date), overdose of drugs, alcohol, and narcotics. However, some term life products deviate from the norm by including specific exclusions. Therefore, when purchasing term life insurance, consumers should not only compare premiums but also pay attention to exclusions and do a bit more research. In Ms. Wong’s case, the decision on whether the insurance company will accept the claim depends on the specific exclusions in her policy.

Case 3: A convicted terrorist purchased a life insurance policy and later passed away due to cancer. Will his life insurance beneficiary (his wife) receive compensation?

This is a real case that occurred in Canada. In brief, the Ontario Court of Appeal ruled that the insurance company was not required to compensate the beneficiary because the deceased husband (the policyholder) failed to disclose to the insurance company at the time of purchase that he had been convicted of terrorist activities in another country. These activities included firing live ammunition and throwing grenades at an Israeli airline passenger plane, resulting in at least one death. He was later released during a hostage negotiation, relocated to Lebanon, and eventually smuggled himself into Canada.

Court documents revealed that shortly after purchasing the life insurance policy in Canada, the insured individual informed the local government that his life would be at risk if deported to Israel. This demonstrated that the individual was fully aware of the serious threat to his personal safety posed by his past activities and his illegal entry into Canada under a false identity. It also reflected his deliberate concealment of past activities from the insurance company, failing to disclose material facts, which amounted to fraud. Ultimately, the court ruled in favour of the insurance company.

This raises the question: Does having a criminal record mean one cannot purchase life insurance? If a criminal conviction automatically disqualified compensation, it might not align with reality. As mentioned in our earlier articles, the vast majority of term life insurance policies cover illegal activities and even war-related incidents.

Case 4: A diabetic patient used a falsified medical certificate from a foreign hospital to successfully purchase a life insurance policy from an insurance company. After the patient passed away, the insurance company, while processing the claim, found something suspicious, and the fraud was eventually uncovered, leading to a refusal to pay out. Is the insurance company’s action reasonable?

Insurance contracts are governed by the principle of “Utmost Good Faith.” Even if the insurance company does not inquire about certain information, the policyholder is obliged to disclose any material facts to the insurer. Therefore, if a policyholder misrepresents or omits health conditions, preventing the insurance company from making a fair and accurate underwriting decision at the outset, the beneficiary may not receive compensation as a result.

If you have any legal questions related to insurance, feel free to email your queries to legalcorner@10life.com. 10Life will forward the questions to lawyers for answers, helping you understand the protections afforded to you by the law.

Terms and Conditions:

Questioners must provide their name, phone number, and email address when submitting queries.
10Life will periodically forward the collected questions and questioner details to relevant lawyers. If the number of questions is too high, lawyers will only select some to answer.
Please do not submit personal information or any documents related to insurance companies, clients, or insurance agents to 10Life.

Despite the wide variety of life insurance products available in the market, 10Life has rated each product for your convenience. To compare relevant products, feel free to use 10Life’s 《Product Decoder》:

Compare Term Life Insurance
Compare Whole Life Savings Insurance

Further Reading:

〈Why Do Life Insurance Policies Have So Few Exclusions? A Comparison of Coverage and Exclusion Concepts Between Life Insurance and General Insurance〉

Note: The above information is provided by 10Life and is updated as of 13 August 2021. It is for reference only and does not constitute sales advice.

This English version of this article has been generated by machine translation powered by AI. It is provided solely for reference purposes. In the event of any discrepancy or inconsistency between this translation and the original Chinese version, the Chinese version shall prevail.

Last updated: 2 Feb 2026

10Life Editorial Team

Our team of professional content researchers focussing on insurance

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10Life Editorial Team

Our team of professional content researchers focussing on insurance

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【Claim or No Claim?】Unpacking Life Insurance Dispute Cases - Key Details Revealed

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