Term life insurance is a great way to provide financial support to your family or pay for your final expenses. However, there are times when a term life policy will not pay a death benefit. Even if you have paid into the policy as required, certain types of death are not covered, and your beneficiaries will not receive a payout. Therefore, it’s important to understand what types of death are covered and which ones are not.
Types of Death That May Not Be Covered
The following types of death are normally not covered by your term life insurance policy.
- Lying – Lying on the application will void your policy, especially if it involves undisclosed health issues.
- Murder – In some instances, murder may void your policy and prevent a payout to your beneficiary.
- Suicide – Many life insurance carriers will not honor a claim if it is determined that the insured person committed suicide or harmed themselves in any way that eventually resulted in their death.
- High-Risk Hobbies – Participating in high-risk hobbies such as driving race cars will negate a policy’s validity if the hobby results in the insured’s death. However, you may be able to add additional coverage to account for these activities.
What Happens If There Is No Beneficiary?
If you die and do not have a beneficiary listed on your policy, the death benefit payout will be paid to the deceased’s estate to be distributed according to their last will or the probate laws of their state if no will is found. The money will remain in probate until the allotted time has passed, and the funds can be distributed accordingly. Many people list a beneficiary, only to have them pass away before them. Listing a secondary beneficiary can eliminate that problem in the future.
When Will an Insurer Deny a Claim?
An insurer will deny any claim that they believe is fraudulent in nature or they feel it does not meet the requirements provided within the policy they offered to the deceased. In most cases, the insurer will perform an investigation and only release the death benefit once they are satisfied that the death falls within their guidelines. Fraud may be difficult to prove, but an autopsy will prove health problems that you were less than honest about.
What Does Life Insurance Cover?
Life insurance covers most types of natural or accidental death. Murders and suicides normally do not fall into these categories. Lying on an application or omitting health issues that may increase your risk of death can be claimed as fraud and will cause your insurer to deny any claim against the deceased’s life insurance policy. Deaths that occur due to normal day-to-day activities should also be covered. High-risk activities are more likely to be denied.
If you want more information on the terms contained in your term life insurance policy, contact us today. At J. Archer Insurance Group, we will understand your insurance policy and let you know what it covers so that your loved ones won’t have to worry about anything if you pass away. Being as honest as possible about your lifestyle is the best way to ensure that you can protect your family with a term life insurance policy.
