A rejected life insurance claim can leave you or your family without the payout you expected. The reason may go back years, to an answer on your application or a policy condition you overlooked. You can fix most of these before you ever claim.
The Financial Markets Ombudsman Service (FMOS), which hears insurance disputes, says most rejected insurance claims come down to a handful of recurring issues. If you have life or total and permanent disability (TPD) cover, these are the six to know.
| Reason | What It Looks Like On A Claim | How To Prevent It |
| Non-disclosure on the application | The insurer finds a condition or symptom in your medical records that you didn’t include in your application. | Answer every health question fully when you apply. |
| An exclusion applies | Suicide in the first policy year, or TPD from a self-inflicted injury. | Read the exclusions in your Product Disclosure Sheet (PDS) and policy contract. |
| The TPD definition isn't met | You can't do your old job but could do other work, or the disability hasn't lasted six months. | Check your policy's TPD definition before you rely on it. |
| The policy wasn't in force | The premium remained unpaid after the grace period, or the event fell within a waiting period. | Pay by auto-debit and note any waiting periods. |
| Claim conditions not met | Late notice to the insurer, or documents missing. | Tell your nominee where the policy is and how to claim. |
| Fraud | A medical bill altered to support a false claim, or a diagnosis recorded with a false earlier date. | Claim only for what happened. |
How Non-Disclosure Leads To A Rejected Or Reduced Claim
When a claim comes in, the insurer checks your medical records, and that’s often when a wrong or missing answer turns up. For a personal policy, the Financial Services Act 2013 sets out what the insurer can do next, and the Islamic Financial Services Act 2013 does the same for family takaful.
What the insurer can do depends first on how long your policy has been in force.
After more than two years, the insurer can cancel the policy over a wrong answer only if it proves two things. The answer must have changed its decision, and it must have been given fraudulently. The rule is in Schedule 9, paragraph 13 of the Financial Services Act 2013.
In a June 2026 case, the Kuala Lumpur High Court ruled on a policy bought in 2021, where the cancer was diagnosed in 2023. The agent had filled in the form. The court held that the insurer had to prove fraud, found that negligence wasn't enough, and ordered it to pay the RM100,000 critical illness claim.
In the first two years, the insurer doesn't have to show fraud. What it can do depends on why the answer was wrong, and if it says an answer was deliberate or reckless, it has to prove it.
If the form asks a clear and specific question, the law assumes you knew the answer mattered. This includes questions about symptoms, even if you haven’t received a diagnosis. FMOS gives examples such as a recurring cough or back pain that mattered to the insurer.
| Why The Answer Was Wrong | What It Means | What The Insurer Can Do |
| Deliberate or reckless | You knew the answer was untrue, or didn't care, and knew it mattered to the insurer. | Cancel the policy from the start and refuse all claims. |
| Careless | You didn't take reasonable care, but weren’t trying to mislead. | Act on what it would have done with the right answer (see the next table). |
| Honest and reasonable | You took reasonable care, and the answer was still wrong. | Nothing. The remedies apply only when you didn't take reasonable care, so an honest, careful mistake shouldn't cost your family the claim. |
For a careless answer, the insurer's options depend on how it would have treated the application if the answer had been right.
| If The Insurer Would Have | What It Can Do |
| Declined the application | Cancel the policy and refuse claims, but refund the premiums (for takaful, the amount Bank Negara Malaysia (BNM) specifies). |
| Accepted it with an exclusion or different terms | Treat the policy as if those terms applied from the start. The insurer can then refuse a claim linked to the excluded condition. |
| Charged a higher premium | Reduce the payout in proportion to the premium you paid compared with the higher one, as Schedule 9, paragraph 16(4) of the Financial Services Act 2013 allows. |
For example, take a RM500,000 policy where you paid RM1,200 a year but the correct answer would have raised your premium to RM1,500. You paid 80% of the premium the insurer wanted, so a claim in the first two years could be cut to RM400,000, leaving your family RM100,000 short.
An insurer that accepts an incomplete answer without following up is treated as having given up its right to that information. You must still tell it about anything else you know is relevant.
Telling your agent the right answer counts as telling the insurer, even if the agent writes down something else, unless you and the agent worked together to mislead it. Our guide to making sure your life insurance pays out to the right people explains how to answer the application and check what your agent filled in before you sign.
Exclusions That Apply To Life And TPD Claims
Common exclusions include suicide within the first year of the policy, TPD caused by a self-inflicted injury and death or disability from war or civil unrest. The full list is in your PDS and policy contract, and it varies between plans.
If an insurer or takaful operator rejects all or part of a claim, BNM's fair treatment rules require it to explain why and name the policy terms or exclusions it relied on. If a rejection letter cites an exclusion you can't find in your policy, ask the insurer to point to the clause.
Why A TPD Claim Can Be Declined Even If You Can't Work
A surgeon who loses the use of one hand may never operate again, but if they can still teach or consult, a TPD claim can fail.
If you're working, Etiqa's Ezy-Life Secure contract, which is typical, counts you as TPD only if you can't do any job at all to earn money, not just your own. The disability must also last at least six consecutive months before the insurer accepts the claim.
TPD cover often ends before death cover does. Etiqa's stops at your 64th birthday, while Prudential's Disability Care rider runs to 70, so check the age your own cover ends.
If you're not working, for example if you're a homemaker, the same definition looks at six daily activities. They are getting in and out of a chair, moving from room to room, controlling your bladder and bowels, dressing, washing and eating. You count as TPD if you can't do at least three of them without help.
Check the definition in your own policy wording before relying on the TPD benefit.
Claims On A Lapsed Policy
Your policy must have been in force when the death or disability happened. If a premium is still unpaid when the grace period ends, the policy lapses and your cover ends. The grace period is the extra time you get to pay after a premium is due. Etiqa's Ezy-Life Secure allows 31 days, while the Life Insurance Association of Malaysia's guide says monthly premiums usually get only 15, so check your policy schedule.
Restoring the policy later doesn't cover an event that happened while it had lapsed. Waiting periods can start again from the date the policy is restored.
An investment-linked plan (ILP) can lapse even if you've paid every premium, if the account value falls too low to cover the insurance charges. Our guide to ILPs explains how to read the yearly sustainability statement so you can spot the problem before the policy lapses.
When A Claim Pays Less Than The Sum Assured
Some claims are paid, but for less than the amount of cover stated in your policy, known as the sum assured.
| What Happened | How It Affects The Payout |
| Date of birth recorded wrongly | If the correct age means a higher premium, Etiqa's Ezy-Life Secure contract, for example, reduces the sum insured to the amount that matches your correct age. If you overpaid, the insurer refunds the difference instead. |
| A careless answer on the application | If the correct answer would have raised your premium, a claim in the first two years can be cut in proportion, as in the RM500,000 example. |
| An earlier TPD payout | On Etiqa's plan, for example, a TPD payout reduces the death benefit by the same amount, so a later death claim pays only what's left. |
What Your Family Needs To Make A Claim
Your policy may set a deadline for telling the insurer about a claim. FMOS says late notice can lead to a rejection if the delay prevents the insurer from properly investigating the claim.
For a death claim, the person making the claim, known as the claimant, usually needs:
- The insurer’s claim form.
- A certified copy of the death certificate.
- Certified copies of the deceased person’s and claimant’s MyKad.
- Proof of the claimant’s relationship to the deceased.
A certified copy is a copy checked and confirmed as a true copy of the original. Ask the insurer who can certify the documents.
Most insurers also ask for a doctor’s statement and, if the death followed an accident, a police report. A burial permit can’t replace the death certificate. Get the certificate from the National Registration Department (JPN).
If The Death Claim Remains Unpaid After 60 Days
If the insurer hasn't paid within 60 days of being told about the death claim, it must add compound interest from day 60 until payment. This means interest builds on both the unpaid amount and the interest already added. The rate must be at least the average 12-month fixed deposit rate plus 1%. The rule is in Schedule 10, paragraph 12 of the Financial Services Act 2013.
For family takaful, the operator pays compensation instead. The rate is the investment return of the participants' risk fund, which is the pool used to pay claims, plus 1%. The takaful version is in Schedule 10, paragraph 12 of the Islamic Financial Services Act 2013.
If Your Nominee Doesn’t Claim
If your nominee hasn't claimed within 60 days of the insurer learning about your death, the insurer must write to tell them they're entitled to the payout.
If they still haven't claimed within 12 months of the insurer learning about your death, the insurer treats the policy as though no nominee was named. The payout then goes to the person legally appointed to manage your estate, and your family may first need a grant of probate or letters of administration. These are court documents that let someone manage your estate, depending on whether you left a will.
If you're not Muslim and you've named your spouse or child, the payout belongs to your nominee and stays out of your estate. The same applies to a parent if you had no living spouse or child when you named them. Anyone else you name receives it as an executor and must pass it on to the people entitled to it. If you're Muslim, any nominee on a conventional policy receives it as an executor. Our guide to making sure your life insurance pays out to the right people explains these rules in full.
For family takaful, the same applies if your nominee is an executor, meaning someone appointed to receive and pass on the payout. If your nominee is a conditional hibah beneficiary, meaning someone named to receive the payout as a gift, the same 12-month limit applies. If they haven't claimed in time, the money goes to the Registrar of Unclaimed Moneys instead. This is set out in Schedule 10, paragraph 5(3) of the Islamic Financial Services Act 2013. Your nominee can still claim it at any time and for free through the Accountant General's Department's eGUMIS portal.
Tell your nominee which insurer or takaful operator you’re with. Keep the policy number somewhere they can find it, and make sure they know to contact the provider or your agent when they need to claim.
Why A False Claim Can Land You In Court
Exaggerating a claim is insurance fraud, and so is injuring yourself to claim a disability benefit. The insurer can reject the claim and cancel the policy.
In December 2024, a man was charged under Section 420 of the Penal Code with deliberately injuring his own eye to claim RM1 million in insurance. He pleaded not guilty. Section 420 covers cheating and carries a prison term of one to ten years and whipping, and can also bring a fine. FMOS can also refuse to hear a dispute involving fraud.
If an agent, clinic or anyone else offers to change the paperwork to help get a claim approved, say no. The person signing the claim form is responsible for the information on it.
What To Do If Your Life Insurance Claim Is Rejected
Ask the insurer to explain the rejection in writing. It should state the reason and identify the policy clause used to reject the claim.
If you disagree, make a formal complaint to the insurer first. Include any new evidence, such as updated medical reports, and keep copies of your complaint and all replies.
When You Can Take The Dispute To FMOS
You have six months from receiving the insurer’s final decision to take the dispute to FMOS. You can also approach FMOS if the insurer hasn’t replied to your complaint within 60 days.
FMOS handles life insurance and family takaful claims of up to RM250,000 at no cost. It considers whether the insurer’s decision was fair and reasonable and whether it followed the policy terms.
If FMOS Can't Hear Your Claim
FMOS can't take a claim above RM250,000 or one brought after the six-month deadline. For those, the route is a lawyer and the courts. You can still complain to BNMLINK, Bank Negara Malaysia's complaints unit, about how the insurer handled your claim, but it doesn't decide whether the claim should be paid. Our complaints guide explains how BNMLINK works.
Three Things To Do Today
Check the answers on your application, and tell the insurer in writing if one is wrong. If you're still choosing a plan, RinggitPlus compares term life plans from 11 insurers and takaful operators side by side, with each plan's entry ages and minimum cover. Name a nominee, plus a second one in case the first dies before you, and review the nomination after marriage, divorce or the birth of a child. Then tell them which insurer you're with and where to find the policy number.
