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Executive Order for Policyholder Payments
Life insurance helps you leave a foundation for your loved ones after your passing. Your loved ones can use the benefits to cover any debts or finalize your estate. However, there are certain instances where your death may not be covered by life insurance.
As long as you pay your life insurance premiums, the insurance company will pay a death benefit to your beneficiaries after you have passed away. Life insurance can help provide financial security to your loved ones. You may opt for term life insurance or whole life insurance policies. Term life insurance policies provide coverage for a specified period of time. Generally, the term is between 10 and 30 years. Once the specified term expires, you have the option to renew, terminate, or switch to another type of coverage. Whole life policies provide coverage throughout your entire lifetime. You'll pay more in premiums but you'll have the complete security of knowing that your loved ones are protected. Another important feature of whole life policies is that they accumulate cash throughout the length of the policy and you may also be eligible to receive dividends.
Be aware that not every death is covered under life insurance. If you pass away under causes not allowed by your policy, your beneficiaries may not receive any death benefits.
If your beneficiary murders you or is somehow involved in your murder, they will not receive the benefits. In this scenario, the benefits will go to your beneficiaries or your estate.
In most cases, life insurance policies cover suicide. However, they also include a suicide contest period during the initial stages of the policy. Life insurance policies generally do not provide benefits if the suicide occurs during the contest period. If you were to pass away due to an overdose, the insurance company must prove that the overdose was intentional to deny the death benefit.
If you frequently engage in high-risk activities, you may not be covered if you pass away. Common activities not covered under your insurance policies are scuba diving, drag racing, hang gliding, aviation, and mountain climbing. Common professions that are categorized as high risk include pilots, loggers, rig workers, and miners. While you should still be able to find coverage, you will likely end up having to pay more expensive premiums. Your insurer also has the option to add an exclusion to your policy that cuts payments if you pass away while performing a high-risk activity.
Your insurer can cut your policy's death benefits if you lie on your application about your family's medical history, alcohol use, and your medical conditions. Your policy can also be canceled if you lie about engaging in high-risk activities.
Figuring out the death benefit can be complicated if you don't have a beneficiary. Things can also become complicated if your beneficiary passes away before you do. If that happens, your death benefit may be transferred to your estate, and your loved ones may not receive it. Be sure to name a primary and contingent beneficiary so that your benefit won't end up in probate.
Life insurance provides peace of mind for both you and your loved ones. The financial security that your benefits may provide are at risk if you engage in high-risk activities. Our experts here at Club Agency Insurance Brokerage will help you with your policy details so that you'll have clarity. Contact us today!
