Help protect your family’s future. Enter your zip code to get your free quote today!

Get Your Free Quote

Common Life Insurance Exclusions

Life insurance pays out a death benefit when you die, but there are a few common exclusions that could prevent your beneficiaries from receiving any money — such as suicide, dangerous activities and acts of war. If you are covered by a life insurance policy but your death falls under one of these exclusions, the insurance company may not have to pay out the benefit

5 Common Life Insurance Exclusions 

If you aren't aware of the exclusions in your life insurance policy, your family could be left without a life insurance payout. Here are five common exclusions and what they mean for you:

  1. Suicide - Most life insurance policies list suicide as an exclusion. For whole life insurance policies, insurance companies will typically not pay out a death benefit if the insured person commits suicide within two years after the purchase of the policy. For term life policies, most insurance companies will issue a refund of the premiums that have been paid to the beneficiary but will not pay out a death benefit. 
  2. Dangerous activity - Some term life insurance policies include dangerous activities in their list of exclusions. Dangerous activities can include anything from rock climbing to SCUBA diving to hang gliding. 
  3. Illegal activity - Most insurance companies also include illegal activities on their exclusions list. This means that if you die while doing an illegal activity, your insurance policy does not have to pay out the death benefit. You might automatically assume that this exclusion is referring to illegal drugs or alcohol, but your beneficiaries could also be in trouble if you die in a car accident while speeding or not wearing a seat belt in a state where wearing your seat belt is the law. 
  4. Aviation - Typically, insurance companies will not pay out a death benefit if you die in a private plane crash. However, most (if not all) insurance companies still pay out your death benefit if you die in a commercial plane crash.
  5. Act of war - This "common" life insurance exclusion isn't as common as it was before the 1970s, but you should still check your policy to see if it is included. This exclusion means that if your death is the result of war, the insurance company does not have to pay out the death benefit. 

Of course, not all life insurance policies have the same exclusions, so you'll need to check with your insurance provider to know exactly what your exclusions are. Other life insurance exclusions include:

  • Misstatement of age - If you lie about your age to your policy provider, they will not pay out your death benefit when you die. 
  • Contestable period - Most insurance policies have a contestable period in which they can view the underwriting of the policy and determine whether or not information was misrepresented or withheld. If they find something, they may not have to pay out the death benefit.  
  • Material misrepresentation - This is similar to the contestable period but lasts for the entire term of your life insurance policy. Basically, if you withheld information or misrepresented yourself in order to get approved for a policy and the insurance company finds out, they can cancel your policy at any time. 

Buying a Life Insurance Policy

Before you swipe your card on a life insurance policy, make sure you understand what exclusions your policy will have. You can get started by calling 800-966-7169 to speak with a licensed agent. Your agent will work with you to find a policy that fits your needs and your budget, and they'll make sure you understand exactly what your policy covers and what it doesn't.

 

-------------
Sources:
http://budgeting.thenest.com/common-term-life-insurance-exclusions-33370.html
http://www.insuranceqna.com/life-insurance/life-insurance-exclusions.html
http://wellkeptwallet.com/2013/04/be-aware-of-life-insurance-exclusions/

 

*Applications for insurance may be subject to acceptance by insurer. Rates and coverage amounts will depend upon the carrier selected.

Help protect your family’s future. Enter your zip code to get your free quote today!

Get Your Free Quote

Related Information

Is Whole Life Insurance Right for You?

Whole life insurance pays out a death benefit to the beneficiary when you die and accumulates cash value over time.

Read More

What is Term Life Insurance

Term life insurance pays a death benefit to the policy beneficiary if the policyholder dies within the term of the policy.

Read More

What are the Benefits of Term Life Insurance?

Protect your family from facing a financial burden after your death with a term life insurance policy.

Read More

What Is Life Insurance

Life insurance policies pay money to a beneficiary upon the policyholder's death. Here's what to know when shopping for a policy.

Read More

Term Life Insurance Policy

Here's everything you need to know if you're in the market for a term life insurance policy, from coverage to pricing.

Read More

How to Claim Benefits for Term Life Insurance

Generally, there are 3 main steps beneficiaries must take to receive a life insurance payout: file a death claim, provide proof of death and wait for approval.

Read More

Who Needs to Buy Life Insurance?

Life insurance pays money to beneficiaries after the death of a policy holder. Who should buy life insurance and how can the benefits be used?

Read More

Reasons to Buy Term Life Insurance for Children

Term life insurance for children provides death benefits if your children die while the policy is active. Learn more about how these policies work.

Read More

Which Term Life Insurance is Best for Veterans?

Active duty military personnel who receive Servicemembers' Group Life Insurance can later enroll in renewable term Veterans' Group Life Insurance.

Read More