Your loved ones will receive a life insurance payout from your insurer if you’ve been paying your premiums regularly and pass away with active coverage in place. However, there are some instances where your insurer may refuse to pay out a death benefit. In this article, we will discuss the types of death which will not be covered by your life insurance policy.
5 Times Your Life Insurance Will Not Cover You
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Dishonesty
The insurer may decline to pay the death benefit if you provided false information when applying for your life insurance policy because such dishonesty amounts to insurance fraud. This includes lying about:
- your current or previous health conditions
- your family medical history
- any risky hobbies
- travel plans
It’s best to provide honest answers during the underwriting process to avoid denial of the death benefit to your beneficiaries.
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Accidental Death During an Uncovered Risky Hobby
Chances are your loved ones will not get the death benefit payout if you die while participating in a dangerous sport or fun activity that’s excluded from your life insurance policy. If you want to be covered for risky hobbies like bungee jumping, flying a private plane, or scuba diving, ensure these hazards are included in your policy.
This rule of thumb applies if you regularly participate in a hobby that your insurer deems too dangerous. In that case, your policy may have an exclusion that voids death benefit payment if the risky activity kills you in an accident. For instance, amateur pilots may have to accept an aviation exclusion clause to secure life insurance coverage. If they died in a flying accident, their dependents wouldn’t receive the death benefit.
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Murder
The slayer rule prohibits death benefit payment to any potential beneficiary that murders a life insurance policyholder. Any beneficiary that is involved in the murder of the insured is likewise not entitled to the payout. In this scenario, your estate or contingent beneficiaries get the payout. Also, life insurance policies may not cover deaths resulting from the insured’s involvement in an illegal activity, although this varies by insurer.
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Suicide
Life insurance policies cover suicide on condition that such death doesn’t occur in the first two years of coverage. Insurers insert this caveat to discourage policyholders from committing suicide immediately after purchasing the policy. However, death from a drug overdose often complicates this matter. If the insurer can prove that the overdose was intentional, they can invoke the suicide clause and deny the death benefit.
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Death Caused by an Act of War or Terror
Some carriers do not provide coverage for deaths caused by war or terror. However, the war/terrorism exclusion isn’t as common in life insurance as in other types of policies. This can get a bit complicated for individuals serving in the military. Your current rank and deployment status usually determines whether you’re eligible for private coverage.
Since life insurance exclusions can vary by insurer and policies, it’s a good idea to seek clarification from your insurance agent. Before you sign the policy, always read the fine print to see what risks are covered or excluded. Contact us today at Donald Weiss Insurance Services to get started on your tailored life insurance policy!