Unfortunately there are many, many cases of pilots taking big LOL insurance payouts, only to return to flying a year or two later. It isn't necessarily anyone's fault, but insurance companies and mutual funds understandably want to be sure that the loss of licence is permanent and irrevocable before handing over the money.
If they didn't, LOL insurance would be unobtainable.
I know of four guys who have lost their medicals, seemingly without hope of ever getting them back. All four are back flying. One took a 500,000 pound payout (this was in the UK). Of course the insurance company came after him, but there was little they could do.
It also highlights the need for pilots to plan better. Your income depends on your medical, so it's wise to have a second skill to fall back on if it all turns to custard... because any insurance payout you get is highly unlikely to get you to retirement.