When your hobbies impact your life insurance
Insurers may deny paying out death benefits if you die doing something dangerous
When you think about it, life insurance doesn’t do anything at all for us while we’re alive. Instead, it provides a monetary payout to a chosen loved one after we pass away. That death benefit can be particularly useful if there is a risk you might die at a young age, perhaps leaving behind little children who are unable to care for themselves financially.
Generally speaking, life insurance companies know that you’re less likely to die of disease or natural causes earlier in life. Therefore, insurance premiums can be substantially cheaper for people in their 20s, 30s, and 40s. If you regularly engage in activities your insurance company deems risky, however, you could see your rates skyrocket. Also, should you pass away while engaging in one of these hobbies, your beneficiaries might have a fight on their hands when it comes to collecting your death benefit.
Such activities include:
Due to the impact these hobbies have on life insurance rates, many consumers simply don’t disclose them in their life insurance application. While failure to disclose significant information in an application is never a good idea, it can be particularly devastating if you pass away while engaging in a dangerous activity. Here are some ways life insurance companies use risky hobbies as a basis for claim denials.
The period of contestability
One of the most frequent reasons we see for the denial of life insurance claims is the fact that a death occurred during what is called “the period of contestability.” For most policies, the period of contestability is the first two years that the policy is in force and effect.
Should you die during the period of contestability, the insurance company can try to deny any claim against your policy for a variety of reasons. This includes the fact that you died while engaging in a dangerous hobby that was not disclosed in your original application.
A word of caution is warranted here. Frequently, beneficiaries will try to get around these claim denials by falsely telling the insurance company the death resulted from a freak accident – in essence, that the policyholder died the one and only time he engaged in the risky activity. This is never a good idea.
In this day and age, insurance companies have become incredibly skilled at investigating their policyholders’ lives online. They will scour social media, websites, and online chatrooms for evidence that the dangerous activity was a hobby or a way of life. If they can make that showing, claims against the policy will almost certainly be denied.
Know your policy language
If you do have a hobby that could be considered hazardous, you should carefully read the language of your life insurance policy even if you disclosed that hobby in the application process. This is because many life insurers find certain activities so inherently dangerous that they expressly exclude deaths due to those activities from policy coverage.
In the event you die while engaging in one of these activities during your policy term, claims against that policy will almost certainly be denied. This is the case regardless of the veracity of your application disclosures. It also won’t matter if you are past the period of contestability. The most common activities to be explicitly excluded from life insurance policies include SCUABA diving, flying/aviation, race car driving, and rock climbing.
Regrettably, some policies also relieve the insurer from paying death benefits if the policyholder dies during an “act of war.” While these clauses are less popular today than they were in the past, insurance companies may still try to sneak them into the fine print of some life insurance policies. Thus, if you or your loved ones are active military members (or plan to be), you need to keep a careful eye out for this exclusion.
So, what do you do if one of these perilous hobbies is really important to your life? Are you expected to simply forgo life insurance? Not necessarily. There are specific insurance policies and insurance companies that specialize in offering life insurance for those who engage in high-risk behaviors. As noted earlier, it’s likely you’ll pay significantly higher premiums than those who don’t have the same hobbies as you. If something happens to you, however, your loved ones have a better chance of making a successful claim.
Dangerous does not have to mean denial
Let’s face it, life insurance companies are financially motivated to collect premiums and deny claims. Clients come to us all the time having been denied a death benefit due to the deceased policyholder’s risky behavior at the time of death. Just because that activity was dangerous, however, does not automatically mean the insurance company is correct in issuing a claim denial.
In fact, in some cases, we are able to prove that the life insurance company had knowledge of the deceased’s dangerous activities before the death. If the insurance company did nothing to try to change or rescind the policy despite that knowledge, we can often successfully argue that the insurer waived its right to deny a claim based on that activity.
The important thing to keep in mind when dealing with life insurance denials is that the insurance companies are very savvy. They have well-trained attorneys and claims adjusters whose sole job is to find reasons to deny claims. They know the policy language backwards and forwards, and make a living off of obscure policy terms that they use to deny coverage.
This is precisely why it is critical for clients to contact our firm when they are contesting a life insurance claim denial. The primary focus of our practice is to meet those insurers head-on, and to hold them accountable for paying on policies they contractually agreed to honor. We know their bad-faith tactics, delay strategies, and penchant for litigation. Nonetheless, we beat them at their own game all the time.
If you need help contesting a life insurance claim denial, call us today. We’re here to help.
Contact us today if you have a delayed or denied life insurance claim.