What Life Insurance Does Not Cover
The following are instances where certain policies could deny your loved ones death benefit claim, were you to pass away. It’s important to know what these situations are and if they apply to your specific life insurance policy, so you can best protect your family.
Many life insurance policies have a suicide exclusion (or suicide clause), where a death that is self-inflicted would result in a denied life insurance claim. If it’s determined that you intentionally caused your own death, your family would not receive any benefits.
Suicide clauses are most often seen during a policy’s contestability period. This period usually includes the first two years (occasionally, the first year) of a life insurance policy’s coverage, during which a carrier is allowed to thoroughly investigate (and deny) any death benefit claims that may arise. After the contestability period has ended, however, deaths caused by suicide are generally covered.
You can also expect suicide to be excluded from accidental death insurance policies, which are intended to cover deaths that are sudden, unexpected, and, as the name implies, accidental in nature.
Illness or natural cause
If you have an accidental death insurance policy and pass away from an illness or other natural cause, your family’s death benefit claim will be denied.
Illness and/or natural cause deaths can also result in a denied claim if they occur too early in the policy or if you weren’t entirely honest during your application process (more on both of these below).
Death during a dangerous activity
Some life insurance policies will have a hazardous activity exclusion written into the coverage. This means that if you were to pass away while participating in a dangerous activity, your family’s death benefit claim could be denied.
The definition of hazardous activities will vary from one carrier to the next, but generally may include:
- Bungee jumping/BASE jumping
- SCUBA diving
- Hang gliding
- Race car driving
- Horseback riding
- Flying a plane
- and more
If you participate in any of these activities, you’ll want to let your carrier know during the application process (this may or may not result in an increase in premiums). If you decide to participate in one of these activities after you’ve already purchased life insurance coverage, be sure to check with your carrier to ensure that a potential death would still be covered.
Death during an illegal activity
If you die while committing or participating in an illegal activity (even if you don’t realize you’re committing a crime), your life insurance carrier may deny your beneficiaries’ claim.
For example, if you were killed while robbing someone or stealing a car, your carrier would more than likely deny any claim for death benefits on your policy. This could also be the case if you were to die while trespassing on someone else’s property, even if you didn’t realize you were trespassing.
And if you were to die while, say, illegally drag racing, expect that your loved ones’ claim would be denied both because this is a hazardous activity as well as an illegal one (depending on the policy).
Acts of war
If your life insurance policy has an act of war clause, it means that if you were to die as a result of an act of war — such as one country’s attack on another — the carrier has the right to deny your beneficiaries’ claim for death benefits.
This clause may or may not include a terrorism clause, which would reserve the carrier’s right to deny claims for a death related to a terrorist attack.
Death when the application is contested
Most life insurance policies will have a two-year contestability period. If you pass away during this time, the carrier will generally go through and analyze your application and your cause of death with a fine-toothed comb, to see if there were any inconsistencies.
If the company finds evidence of any fraud — such as hiding a medical concern, not being transparent about dangerous hobbies, or lying about tobacco use — your loved ones’ death benefit claim could be denied.
Death happens too early into the policy
In addition to the two-year contestability period mentioned above, your family’s claim could also be denied if you die too soon (usually within the first year or two) after buying a policy with a graded benefit.
Graded benefit policies have a built-in waiting period in order to qualify for a full death benefit. If you pass away before the end of this waiting period, your family will generally only receive a refund of your paid premiums up to that point; in some cases, they may receive a small percentage of the policy’s death benefit.
If you pass away after this waiting period has passed, your beneficiaries will receive the policy’s full death benefit.
When you move out of the country
If you purchase a life insurance policy in the United States and then, years later, move out of the country, you may invalidate your coverage. If you were to then pass away after having lived abroad for a number of years, your carrier could potentially deny your family’s claim.
It’s important to read the details of your policy and contact your carrier to see if your coverage will remain intact if you move out of the US. In some cases, becoming an expat isn’t a problem at all; in others, living out of the country for more than six months could nullify your coverage.
Note that this is only a concern if you are moving out of the country for a certain period of time. Generally speaking, your coverage would still pay out if you were to pass away while simply traveling to another country.
How to Avoid Denial of Life Insurance Claims
The best way to avoid a denial of coverage is to be entirely honest throughout the application process. If you have any health or medical concerns, a notable family medical history, use tobacco products, participate in dangerous hobbies, etc., it’s imperative that you disclose this information to your carrier.
Failing to be transparent with your insurance company could potentially trigger a denial, especially if your death occurs during the contestability period. If your cause of death relates to whatever you were dishonest about (failing to disclose cardiac issues, for instance, and then dying of a heart attack), your loved ones’ claim could be denied even beyond the contestability period.
The next best way to avoid a situation where your family would be denied life insurance benefits? Simply read your policy thoroughly. Knowing exactly what your policy covers — and what it doesn’t — can help you choose the right coverage and may even dictate the way you handle certain situations along the way.
Term life insurance coverage quoted through LeapLife covers deaths by natural and accidental causes, no matter where you go in the world. If you’re ready to find your next policy, LeapLife can help you find the perfect coverage for your loved ones through one of our trusted, A (or higher) rated life insurance partners. Life insurance coverage is available in all 50 states and it only takes minutes to apply online!