Will a Life Insurance Policy Pay if only One or Two Payments have been Made?


One of the best features of a life insurance policy is that it will pay benefits as soon as the policy is in effect. Some people wonder how an insurance company can pay out a six-figure death benefit after receiving only a few premium payments, but that is actually what they are contractually obligated to do.

An insurance company will pay the death benefit even if it happens after only one or two premium payments. When an insurance company writes policies, they know that policyholders will die at various times during life insurance policy terms. Some will live another 40 or 50 years, and yes, some will die within the first year, and the policies will pay all of them.

There is one exception…

Most insurance policies have a built-in provision that prevents payment of death benefits in the event of suicide. But this limitation is only temporary, usually not more than two years. This is referred to as the period of contestability, and once it expires, the policy will be paid even if suicide is the cause of death.

This provision is to prevent the idea that a person might take a very large life insurance policy and then commit suicide so that their loved ones will benefit from their death. While that is always possible once the period of contestability expires, it will be highly unlikely that the policyholder took the policy with the express purpose of committing suicide. The two year delay makes it highly unlikely.

…And possibly one more

There is one more possible exception that may prevent the insurance company from paying out on the policy in event of your death, and that is health condition.

If the insurance company has reason to believe that the insured died from a pre-existing condition that was not disclosed on the life insurance application, it could decline payment on the policy. At a minimum, they might delay payment in order to conduct a review of your prior medical history. This more likely to be suspected if the policy is fairly new.

It makes a strong case for filling out the application with complete accuracy

There is of course a way that you can prevent questions about your health condition from interfering with payment on the policy, and that is to fill out the insurance application as completely and accurately as possible.

People are often tempted to withhold certain information on a life insurance policy out of fear that the policy may be declined, or that they may be charged a higher premium as a result. But there are three factors that you need to be aware of that might help you to complete the application with complete accuracy:

  1. As mentioned above, the insurance company could deny paying on the policy if it determines that there were material inaccuracies on your application.
  2. During the application process, the insurance company conducts third-party verifications of your health records, so they may have the information even if you don’t disclose it.
  3. The insurance company will likely approve your application – and not even charge you a higher premium – if you provide full disclosure of all health conditions.

It simply isn’t worth providing false information on your insurance application. If you do, you may spend years paying your premiums on a policy that your family will never collect on at the time of your death.

Which makes an even stronger case for getting life insurance when you are healthy

The time to apply for life insurance is when you’re in good health. Not only will your application be more likely to be approved, but there will be less incentive on your part to hide any health information on the application.

A real life example

Except for the two exclusions above, your life insurance policy will pay if you only made one or two premium payments. If you want proof, the host of this site, Neal Frankle – and his siblings – were able to get a solid start in life as the result of the receipt of life insurance proceeds from a life insurance policy taken by his father just two months before his death.

Neal and his siblings were just teenagers at the time of his father’s death, and that life insurance policy – with just two payments made on it – provided them with opportunity that is benefiting them all even today.

It’s never too late to take a life insurance policy!