Last Updated on: 22nd November 2023, 01:05 am
LIFE insurance policies can benefit individuals as they provide financial coverage as protection against the unlikely event of death. In general, these policies work with the idea of a lump sum payout. But what are the chances that your life insurance policy will payout?
There are some instances in which your life insurance won’t payout. From drug involvement in death causes to suicide deaths, there are few common instances where all the benefits of a life insurance policy are denied. Take a look at such five common cases:
Involvement Of Drugs/Alcohol In Death Cause
When a life insurance policy is purchased, the insurance provider will do a background check to ensure that no one has used drugs within the last six months. If there is evidence of drug use within this range, then the chances are that there will be a denial of benefits on the policy.
Whether it was legal drugs or illegal drugs, any evidence of their use can nullify policy payments. Also, if there are traces of alcohol in your bloodstream at the time of death, then chances are drug involvement will be suspected in your death, and life insurance benefits will be denied.
Deaths caused by homicide are also denied on life insurance policies. If it was suicide, the life insurance provider could still pay the claim and, in some cases, provide additional coverage on suicide claims. However, if a death is a homicide, in most cases, there won’t be any payout even after a death claim has been submitted. Homicide is among the most common reasons life insurance won’t pay out.
Suicide is one of the leading causes of death in the US today. Most of those who commit suicide suffer from medical conditions or financial difficulties. Even though these people do not plan on revealing their intentions to others, there are instances where family and friends recognize signs leading up to these types of deaths.
In some cases, there can be additional coverage for suicide claims. In rare cases, the company might send out an investigator to determine more certainty of the death’s circumstances. However, in most cases, suicide claims are not paid out and will ultimately result in denial of benefits.
Failing to Pay Insurance Premium
A life insurance policy can be canceled if the insured fails to pay for their monthly premium. If a policy provider detects a decline in insurance premiums, it may cancel your policy. Even without payment of your premiums, there is a chance that life insurance benefits will be denied based on failure to pay premiums.
Death Due To Malpractice/Unintentional Injuries
In many cases, your life insurance provider will not agree to pay out if you die due to an injury or long-term illness such as a motor vehicle accident or even if it was caused due to malpractice. Other reasons include death benefits not being paid, life insurance lapses in specific instances, mismanaged or canceled intent to purchase policies, etc.
In a nutshell, these are the five common reasons you will not receive benefits of any type from your policy. Now make sure to read them before committing yourself to any policy type.