Deaths Not Covered By Life Insurance

    What Types Of Death Are Not Covered By Life Insurance: What You Should Do When Your Policy Doesn’t Pay Out

    The purpose of a life insurance policy is to provide your loved ones with financial security after your death. The receiver – known as the beneficiary – acquires this amount in a tax-free lump sum. 

    Unfortunately, this coverage (or the sum assured) is not guaranteed. How you die can determine whether or not your policy pays out. In this guide, you’ll learn which types of deaths are not covered in term or whole insurance policies. 

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    Does Life Insurance Cover All Deaths? 

    A term life insurance policy will release the payout in most instances of death. However, there are a few exceptions in which a life insurance company might withhold the death benefit or sum assured. 

    In some cases, the manner of death will determine whether or not your beneficiary receives the payout. These include instances of suicide, homicide, or death cases due to reckless behavior. If you lie on your application or omit information, your insurer can also withhold the payout regardless of how you die. 

    Standard Exclusions On Life Insurance Policies 

    Life insurance companies enforce exclusions to protect themselves from risk. Early or reckless death cases can cause an insurance company to lose money if they release the sum assured. Thus, insurers will gather information such as:

    • Pre-existing conditions and family medical history
    • Lifestyle and hobbies
    • Occupation

    This information allows insurers to make thorough risk assessments and price premiums reasonably. 

    Ultimately, what a whole or term insurance policy excludes will vary across insurers. Here are a few common exclusions that your policy may not cover. 

    Accidental Death Cases

    All life insurance policies cover accidental death cases. However, a whole or term insurance plan won’t cover accidents that occur due to intoxication or reckless behavior. 

    For example, permanent or term insurance won’t cover a vehicular accident if the policyholder was driving under the influence or acting negligently. Similarly, a whole or term insurance plan will also exclude death due to dangerous activities. These hazards include: 

    • Adventure sports such as bungee jumping, race car driving, skydiving, and other similar activities
    • High-risk occupations such as firefighting, law enforcement, or manual labor

    If you omit this information on your life insurance application, your insurer can reject a future claim. While being honest on your application might increase your premiums, it might also qualify you for exclusion riders. These riders cover you for hazards a whole or term life insurance plan will not. 

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    Suicide is the 10th leading cause of death in the U.S. Your permanent or term life insurance plan might enforce a suicide clause to prevent companies from losing money. This clause withholds the death benefit if the policyholder commits suicide within the first two years of the contract becoming active. 

    This two-year period – known as the contestability period – protects insurers from applicants with plans to commit suicide to financially benefit their families. If the policyholder commits suicide within the contestability period, the term insurance plan will only dispense the premiums paid, not the full death benefit. 

    To prevent a claim rejection due to a death by suicide, insurers study an applicant’s mental health history. If a policyholder provides evidence of treatment, they can still qualify for competitive premiums and preferable health classification. However, an insurer can still withhold the payout if the policyholder dies due to self-inflicted injuries within the first two years of their policy. 


    If the policyholder is killed by one of their beneficiaries, that individual will not receive the death benefit. The slayer rule – or slayer statute – allows insurers to withhold the lump-sum death benefit if there is reasonable doubt. 

    In the case of death due to homicide, all claim requests are put on hold until:

    • All beneficiaries are acquitted of the accusations
    • Investigators come up with murder charges

    If only one beneficiary is found guilty of murder charges, insurers will release the payout to a contingent beneficiary. If the deceased hasn’t named a second beneficiary, the whole or term insurance plan benefit will be distributed to the policyholder’s estate.

    Lifestyle & Habits

    When filling in an application for a whole or term insurance plan, you’re likely to come across a few questions about your smoking habits. Smokers pay higher premiums because they are riskier to insure. Even if you quit smoking a long time ago, its long-term effects can impact your health classification. 

    If a smoker lies on their application, the insurance company can withhold the lump-sum benefit if the policyholder dies due to a smoking-related condition. If you develop a smoking habit after applying for term insurance and die of a smoking-related cause, your whole term insurance policy benefit may not be released.

    If you quit smoking to ensure a payout, most whole or term insurance plans will allow you to retake a medical exam after one year. 

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    Illegal Acts

    If the death of the policyholder occurs while committing an illegal activity, the permanent or term insurance plan payout will not be released. For instance, if the policyholder dies due to an accident while committing theft or vandalism, an insurer will not pay the beneficiary. 

    If the deceased was unaware that they were committing criminal activity – such as fraud or trespassing –  the life insurance company could still reject the claim. However, your beneficiary can contest the rejection with sufficient evidence. Most life insurance providers will have an appeals process. 

    If not, your beneficiary can request assistance from the State Department of Insurance or work closely with an insurance attorney. Remember that contesting a claim denial can become costly and worth more than the coverage itself. 

    What You Should Know About Insurance Exclusions 

    If any of the circumstances above apply to you, chances are your loved ones won’t receive the payout upon your death. The best way to ensure that your whole or term insurance policy pays out is to read the fine print carefully. 

    Life insurance plans can be challenging to decipher. If you’re having trouble understanding your policy terms, work with an insurance lawyer and keep the following considerations in mind. 

    Life Insurance Will Cover Most Accidental Deaths

    Most term insurance plans will cover death due to an accident. The scope of the accident won’t affect the likelihood of a payout so long as the policyholder was not:

    • Acting under the influence of drugs or alcohol
    • Engaging in criminal activity, such as theft or trespassing
    • Engaging in a hazardous activity, such as extreme sports 

    If a policyholder wants to provide additional coverage for death due to accidental circumstances, they can purchase a rider outside of their basic plan. 

    The Contestability Period Matters

    An insurance contestability period allows an insurer to validate the information provided by the policyholder. Unless you lie on your insurance policy application, your beneficiary will still receive the payout even if you die within the contestability period. How long this period lasts will depend on your insurer. 

    However, if the death of the policyholder occurs under suspicious circumstances, the insurer must conduct an investigation. If they can provide evidence of fraud via an autopsy or other documentation, they can withhold the payout. 

    Similarly, an insurance company can reject your beneficiary’s claim if you commit suicide within this period. If you are unsure whether your insurance policy covers death due to self-inflicted injuries, study your state’s suicide clause. 

    Not All “Natural” Causes Will Count

    While a typical insurance policy will cover all natural deaths, it won’t provide benefits for: 

    • Sexually transmitted diseases, like HIV or AIDS
    • The coronavirus, if you apply for a new policy during the pandemic period
    • Health-related issues caused by lifestyle choices
    • Terminal illnesses in which you are not expected to live beyond 12 to 24 months

    Suppose you have a pre-existing condition and fail to disclose this information on your insurance application. If you die due to related causes within the contestability period, your beneficiary will not receive the payout. 

    As much as possible, provide accurate and thorough information when applying for insurance plans to prevent a claim denial. 

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    Having A Nominee Helps

    Though it isn’t mandated, having a nominee can help make the distribution of benefits easier. When you die, the benefits will be paid to the nominee. If the death occurs under suspicious circumstances, a nominee can ensure that family members receive the benefit. A nominee can also help prevent disputes and are responsible for facilitating claims processing in case of rejection. 

    Most individuals select family members as their nominees, though it’s possible to nominate a close friend or distant relative. In case you select more than one nominee, you’ll have to specify how much of the amount should be paid to the nominee. 

    If an individual plan to change or eliminate their nominee, they must submit a form for approval. 

    Other Reasons Your Insurance Won’t Pay Out

    The manner of a policyholder’s death isn’t the only thing that determines whether your family receives a payout or not. Whole and term life policies have stringent conditions that policyholders must follow to secure the payout. Below are a few other reasons your term policy might not distribute the benefits.

    Failing To Pay Your Premiums

    52% of Americans think insurance is too expensive. Thus, many individuals choose not to purchase a policy or forget to make their premium payments. If you can’t afford your premium payments and die after the policy lapses, you risk losing the benefit. 

    However, there are a few ways your loved ones can still receive the payout: 

    • Your beneficiary repays the premium within the 30-day grace period 
    • Your bank account is set up to repay your premium automatically

    Outliving Your Policy

    Sometimes policyholders outlive their term insurance. If the death occurs within the term period, the beneficiary receives the payout. If the death occurs outside the term period, the policyholder will no longer be covered by life insurance. Thus, the beneficiary gets nothing, even if the policyholder dies a day after their insurance expires. 

    To make sure your beneficiary receives the payout, you can either:

    • Purchase a new term plan
    • Convert your term plan into a permanent plan 

    There is no other way to secure the payout after your term lapses. Prevent a denied claim by revisiting your options before your policy expires, and consider how much more coverage you’ll need and for how long. 

    In Conclusion

    These are just a few death cases that aren’t covered in term or whole life plans. If you lie on your application, take part in a hazardous activity, or commit suicide, you risk forfeiting the payout. Prevent complications by being honest in your application, knowing what your plans cover, and taking note of the contestability period. 

    If you want to find out what types of death your insurance covers, consult with our experts at Wesley Insurance, LLC. Browse our website to explore your best options for coverage. 

    Written By Cameron McDowell
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