Many people ask us what are the different reasons life insurance wouldn't pay a claim. Almost always they are surprised to hear the answer. Life insurance almost pay every single claim. In fact, in the 30 years I have been in this business, I've never seen a life insurance not pay for a claim when the life insurance has been actively paid. Out of the hundreds of life insurance agents that I know, no one has seen a life insurance claim not be paid.
However, Life insurance companies do have two main clauses when it comes to things in the policy they will not pay:
Suicide: Most people are under the impression that a life insurance company won't pay a claim if the insured (person covered by the life insurance) commits suicide. It is the most common question I get asked. Life insurance companies do have a clause for this. A life insurance company will pay a claim for suicide AFTER the policy has been in force for 2 years. This is a little known fact. An insurance company won't go about sending investigators to your house like they do in the movies. They simply look at the death certificate and go off of what it says. If the coroner says it was a suicide, then that's what they consider it to be. As long as your insurance policy has been inforce for more than 2 years, the insurance company will write you a check.
Acts of War: All insurance policies have a clause stating that if there is an act of war in America, they don't have to pay the claim. HOWEVER, this clause has never been used. Since Pearl Harbor to the the attacks on September 11th, those families who have lost loved ones have received the benefits of their life insurance. So why have this clause if the insurance companies aren't going to use it? This clause is mainly a "worst case scenario" protection for the insurance company. In a situation where a major city like Los Angeles or New York were attacked, the insurance company may not be able to pay all of the claims. Therefore, they have this clause in the policy.
One thing the life insurance companies pay attention to is the idea behind life insurance. The public is paying for an agreement, its a non-physical product. For that reason life insurance companies would like to keep the very strong trust they have built over the years that they WILL pay out when a claim comes in. This is a very important concept to them.
When a claim comes in, the life insurance company simply needs a death certificate (an original, not a copy) and a form signed by the beneficiary. Within a week a check is written and sent to the beneficiary. Most people have the check within 10 days and that check can be a very welcome thing in such a trying time.