All sorts of deaths are covered by life insurance, this includes accidental, natural, and self-inflicted deaths. This answers our question, is life insurance worth it and when do you need it? Well, yes, it is absolutely worth it!
However, there are some things that can be excluded from this. There are some circumstances where the life insurance company investigates the cause, which means life insurance does not pay the death benefit claim.
Reasons, why life insurance won’t pay, include:
- Risky activities
- Undisclosed pre-existing conditions
- Fraud
Navigating Life Insurance Beyond 65: Is It Still Necessary
Consider this small piece of information as you determine your ideal age for purchasing life insurance. As you approach 65, the question ‘Do You Need Life Insurance After 65?’ becomes critical. With financial stability and fewer dependents, the need for extensive coverage may decrease. However, life insurance can still serve valuable purposes. It ensures inheritance fulfillment for loved ones, aids estate planning by offering liquidity to cover taxes, and allows charitable contributions. Evaluating personal circumstances and consulting a financial advisor is key to determining the continued value of life insurance post-65.
What Kind of Deaths Are Not Covered by Life Insurance?
While life insurance is designed to provide financial support to your loved ones in difficult times, there are certain situations where coverage might not apply. Here are six factors to consider:
Engaging in Risky Activities
If the insured person passes away while participating in activities considered high-risk, like extreme sports, bungee jumping, or racing, the life insurance payout might be denied. Moreover, these activities are often excluded due to the increased likelihood of accidents.
Undisclosed Pre-existing Conditions
When applying for life insurance, it’s crucial to be upfront about your health history. If the insurance company discovers that a pre-existing medical condition was intentionally concealed during the application process. Hence, they may refuse to pay out the death benefit.
Death During the Contestability Period
Most life insurance policies have a contestability period (usually the first two years). If the insured person passes away within this period, the insurance company can investigate the application and claim. Additionally, if any material misrepresentations are found, the claim might be denied.
Suicide Within the Contestability Period
As mentioned earlier, if the insured person takes their own life within the contestability period (typically the first two years of the policy), the death benefit may not be paid out. This is to prevent fraudulent claims.
Death Resulting from Illegal Activities
If the insured individual’s passing is a result of engaging in criminal or illegal activities, the life insurance company might deny the claim.
Death Outside Policy Terms
If the death occurs outside the policy’s coverage terms, such as after the policy has lapsed due to non-payment of premiums, the insurance company might not provide the death benefit.
What Kinds of Death Are Covered by Life Insurance?
In cases of natural demise, illnesses, or accidents, your chosen beneficiaries typically receive the death benefit payout from your life insurance policy.
Natural Causes
When we are talking about natural death, including dying from old age or any sort of disease, life insurance does pay for it, of course. Furthermore, due to an internal factor, your body starts shutting down which means dying of natural death rather than an external factor, such as injury or accident.
Accidents
Life insurance generally covers accidental deaths. These are unforeseen events resulting from external causes, such as vehicle collisions, slips, falls, or other sudden mishaps that lead to your unfortunate passing.
Terminal Illness
Many life insurance policies include provisions for terminal illnesses. If you’re diagnosed with a terminal condition and have a limited life expectancy, you might be eligible to receive a portion of your policy’s death benefit early to help with medical expenses or other needs.
Non-Terminal Illness
While terminal illnesses are often covered, non-terminal illnesses might also trigger benefits under certain circumstances. Some policies offer living benefits, allowing you to access a portion of the death benefit if you’re diagnosed with a critical illness or face significant medical expenses during your lifetime.
Passing During Travel
Life insurance usually extends coverage to deaths that occur while traveling. Whether you’re on a vacation, a business trip, or any other journey, your beneficiaries are typically entitled to the death benefit if an unfortunate event takes place.
Medical Conditions and Diseases
In most cases, life insurance encompasses deaths resulting from medical conditions or diseases. Whether it’s a sudden heart attack, stroke, or any other ailment, as long as the condition was not pre-existing and undisclosed, the policy’s death benefit is likely to apply.
Homicide
Death due to homicide is generally covered by life insurance, as long as you were not engaged in criminal activities that led to the fatal incident.
