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What Life Insurance Does NOT Cover

Life insurance is a great option for individuals to consider purchasing to have money leftover for their beneficiaries. Unfortunately, however, life insurance contracts contain some circumstances that do not payout. Here are 8 of the most common examples of what is not covered under most life insurance policies for your family.  

1. Suicide

 Most life insurance policies do not contain suicide benefits as they are under an incontestability clause. In some states, the family may receive premiums in a specified timeframe rather than death benefits. Suicide will not better your family, it will only make it worse for your family. 

2. Engaging in Risky Behaviors

 Engaging in risky behaviors is another instance in which life insurance will not pay out if there is a death. Some of the activities are extreme such as cliff diving, but others are as common as being a motorcycle rider. Be honest about any activity you may engage in. 

3. Pre-Existing Conditions or Smoking

 If you are a smoker or if you were not upfront about your pre-existing health conditions, the incontestability clause applies to you. The company could even put the material misrepresentation clause into effect. This states that withholding information will limit your application’s approval. 

4. Attending an Act of War

 This does not apply to soldiers. This applies to individuals who go into a war zone as a civilian. You are not covered under a life insurance policy if you choose to enter this war zone out of your own volition or as a part of your work. 

5. Engaging in Illegal Activities

 Even if you do not know it, dying while engaging in illegal activity is not covered in a life insurance policy. This is due to the act of needing to utilize common sense. There is a chance that your beneficiaries will not receive benefits if you were engaged in these activities. 

6. Committing Fraud

 If you committed fraud on your life insurance policy, any type of death will not be covered. You should be completely honest in every aspect of your life insurance, from the application to if something changes. Committing fraud is a serious violation. 

7. Moving to Another Country

 If your life insurance was begun in the US and you move, your benefits will not be given out. This is if you are still living internationally when you die. Make sure you understand exactly what your life insurance policy says about this clause, however. 

8. Disabilities

 Life insurance policies only cover deaths. If you are diagnosed with a disability, you will not be covered. Pay-outs are only given upon death. 

Final Thoughts

 It is important to ensure that you fully understand your life insurance policy when you purchase it or apply for it. Make sure you understand every clause and every detail to make sure you and your family will be covered. Speak with your financial advisor to help.

Updated on April 11, 2020

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