In this blog, we will explain the common exclusions in life insurance policies and provide insights into how these exclusions can impact a beneficiary’s ability to receive the death benefit.
1. Suicide Exclusion
One of the most well-known exclusions in life insurance policies is suicide. Almost all life insurance policies include a clause that excludes suicide from coverage, especially if the insured person dies by suicide within the first two years of the policy. The reason for this exclusion is that life insurance companies want to avoid situations where someone might buy a life insurance policy with the intent to commit suicide shortly after, leaving their beneficiaries with a substantial payout.
What Happens if the Insured Dies by Suicide?
Within the Contestability Period: If the insured commits suicide within the first two years of the policy, the insurer can deny the claim. During this period, the life insurance company has the right to investigate and contest any death claim that occurs within this timeframe. However, some companies may refund the premiums paid if the death is ruled as a suicide, instead of providing a death benefit payout.
After the Contestability Period: After the contestability period has expired (typically two years), the insurer may no longer contest the claim solely based on suicide, but other exclusions or factors might still apply.
What Can Be Done if the Claim Is Denied Due to Suicide?
If a life insurance claim is denied due to suicide, beneficiaries may be able to contest the denial. One way to challenge the denial is by submitting a police report or other documentation proving that the death was not intentional or that it occurred due to mental health issues that were not fully disclosed at the time of the application.
2. Substance Abuse Exclusions
Many life insurance policies include substance abuse exclusions, meaning that if the insured’s death results from drug or alcohol abuse, the insurer may refuse to pay out the death benefit. This is because substance abuse is often seen as self-inflicted and could be considered an act of negligence.
What Qualifies as Substance Abuse?
This exclusion is broad and can apply to any kind of substance misuse, including:
Illegal drugs (e.g., heroin, cocaine)
Alcohol abuse (e.g., alcohol poisoning)
Prescription drug misuse (e.g., taking drugs beyond prescribed limits)
It is essential to understand how your life insurance policy defines substance abuse and the extent to which the policy may apply this exclusion.
Fighting a Denial Due to Substance Abuse
If the death is related to substance abuse, beneficiaries may still challenge the insurance company’s decision. Legal advice and proper documentation (e.g., autopsy reports, medical records, or police reports) can be key in disputing a substance-related claim denial, especially if the cause of death was not directly related to the substance abuse.
3. Death During Illegal Activities
Many life insurance policies exclude coverage for deaths caused by illegal activities. This can include a broad range of unlawful acts, such as:
Driving under the influence of alcohol or drugs
Committing a crime (e.g., theft, robbery)
Engaging in illegal drug use or trafficking
Can the Claim Be Denied if the Death Occurs During an Illegal Activity?
Yes, insurers may deny a claim if the insured died while engaging in an illegal act. For instance, if someone dies in a car accident while driving under the influence, the insurer may invoke the illegal activity exclusion to deny the claim.
How to Challenge a Denial in These Cases?
Legal assistance is crucial if an insurer denies a claim due to the insured’s involvement in illegal activities. You can contest the claim by proving that the death was not directly caused by the illegal activity or that the activity was not a material factor in the insured's death.
4. Murder and Homicide
If the insured person’s death is a result of murder, life insurance policies can become complex, particularly when it involves the beneficiary’s involvement in the death.
When Can a Claim Be Denied Due to Murder?
If the beneficiary is the murderer: A life insurance company will not pay the death benefit to a beneficiary who is found to be the perpetrator of the murder.
If the beneficiary is under suspicion: Claims may be delayed or denied while the insurer waits for the beneficiary’s involvement to be cleared through a criminal investigation.
Can a Claim Be Denied if the Insured Was Murdered During the Commission of a Crime?
Yes, some policies may exclude coverage for deaths that occur during the commission of a crime. In such cases, the insurer may deny the claim until the full circumstances of the death are known.
5. War and Acts of War Exclusion
Many life insurance policies exclude coverage for deaths resulting from acts of war. This exclusion typically applies to civilians who die during a war or armed conflict. This could include deaths that occur during a military conflict, terrorism, or civil unrest.
How Can a Beneficiary Fight a Denial Due to War Exclusions?
If the insured was killed in a conflict, beneficiaries may need to provide clear documentation, including military records or government reports, to show that the insured was not involved in combat or that their death was not directly related to acts of war.
6. Hazardous Activities Exclusion
Hazardous activities such as skydiving, motorcycle racing, or scuba diving are often excluded from life insurance policies. These activities are considered high-risk and insurers typically exclude deaths caused by accidents while participating in such activities.
How Can You Challenge a Denial Due to Hazardous Activities?
If the insured did not disclose participation in a hazardous activity, or if the activity was misrepresented on the application, the policy may be voided, and the claim denied. To contest this, beneficiaries must prove that the death was not caused by a hazardous activity or that the exclusion does not apply in their specific case.
Conclusion
Life insurance exclusions can create significant obstacles for beneficiaries hoping to receive a payout. It is crucial to fully understand the terms of the policy and be aware of the exclusions that may apply. If your claim is denied due to one of these exclusions, contact a life insurance attorney who can help you challenge the decision, gather the necessary evidence, and ensure that you receive the benefit to which you are entitled. If you need a Kentucky life insurance lawyer call us.