Life insurance policies are pretty straightforward.
They can be used to cover expenses in the event of your untimely death (as long as your policy is still intact, of course).
However, there are a few things life insurance will not cover. It’s important to understand these so the payout to your beneficiary is not put as risk.
So, what will life insurance not cover?
There are a few instances where the beneficiaries might not receive the insurance benefits in the event of the policy owner’s death. Let’s take a look below.
Fraud or Misrepresentation
This is one of the more common reasons beneficiaries do not receive their benefits. It’s just common sense really. Do not commit fraud or do not misrepresent your situation when you’re applying for a life insurance policy.
If it’s determined that any information on your application was purposely inaccurate, the life insurance company can void your policy. But usually only if they discover the issue within the first two years of the policy. This can happen whether you misrepresented yourself/your situation on the application or committed blatant fraud.
However, after the two-year discovery period, the life insurance company is liable to pay any claim for benefits.
Suicide Within the Discovery Period
Typically, life insurance companies do not provide benefits if the policy owner committed suicide within the two-year discovery period.
Intended Bodily Injury or Death
Life insurance companies have the right to void the policy if they find out that the insured was determined to put themselves at obvious risk that results in bodily injury or death.
Alcohol/Drug Use or Other Risky Behavior
Life insurance policies typically will not pay out if the policy holder’s demise is due to any of the following:
- Alcohol or drug related accident or overdose
- Involvement in criminal activity
- Risky activities like rafting, bungee jumping or skydiving
Late Premium Payments
Delayed premium payments may also cost you your life insurance policy. Some life insurance companies provide grace periods, but it depends on the type of policy you have. Be sure to pay your policies in time to avoid voiding your policy.
Be sure to keep these in mind when you’re purchasing a life insurance policy. For more details about the different life insurance policies you can purchase, visit our website.
