Deaths not Covered by Life Insurance
Deaths Not Covered By Life Insurance: The Short Answer
Deaths not covered by life insurance typically include suicide during the policy’s suicide clause period, usually the first two years; deaths during the contestability period when the application contained a material misrepresentation; deaths from activities excluded by a rider, such as private flying; and any death after a policy has lapsed for nonpayment. Accident-only policies also pay nothing for death from illness. Natural and accidental deaths are otherwise generally covered while the policy is in force.
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Deaths not Covered by Life Insurance
Normally, most types of deaths are covered by life insurance policies and as long as you pay your premium to keep the policy active, death benefit is paid out to your family. Coverage includes deaths from natural causes, such as heart attack, cancer, infections, kidney failure, stroke, old age, or other medical conditions.
Accidental deaths, like those resulting from motor vehicle accidents, drowning, poisoning, fires, or similar incidents, are also covered, entitling beneficiaries to the payout. But keep in mind, if you ONLY have accidental death benefit coverage (without any other type of life insurance like whole life or term life), death benefit will only be paid out if you die out of an accident.
In cases of murder, the policy pays out unless the beneficiary is involved in the act. Life insurance typically covers suicide as well, although if it occurs within the initial policy period—usually the first two years—benefits are not paid.
In essence, to understand the situations where death benefit doesn’t pay out, first you have to understand the concept of contestability period. The life insurance contestability period is a time right after your policy is approved when the insurance company can review any claims to check for inaccuracies in your application.
If they find false or incomplete information, they may deny the claim, which could mean you’d need legal help to get the coverage paid out. Life Insurance policies in most instances after this period is over, will pay out (with some exceptions that we will discuss here).
This period usually lasts two years, though it can vary by state and company, so it’s a good idea to have a knowledgeable broker go over all the details with you.
When will a life insurance policy not pay out?
Firstly, if your policy is expired or if you have missed payments making it inactive somehow, your death benefit will not be paid out. So it is paramount to get life insurance that you can keep paying for down the line. If your beneficiaries die before you, or you name none, the policy still pays: the benefit goes to your contingent beneficiaries or, if none are named, to your estate.
This is why teaming up with one of our experienced brokers helps because they take your needs into consideration, have access to a range of products rather than being tied to one company like captive agents. They can get you affordable life insurance as well as keep an eye on any lapses making sure your family is fully protected at all times.
Here are some other situations when the insurer may withhold a death benefit:
Suicide and Overdose
Life insurance usually covers suicide, but most policies include a “suicide clause” that blocks a payout if suicide occurs within the first two or three years of the policy, depending on the insurer. The suicide clause is a separate rule from the contestability period, although both often last two years. This clause is designed to discourage applicants from taking out a policy with immediate intent to end their lives.
The waiting period for suicide clauses varies but is generally two to three years. Similarly, if death occurs due to an overdose within the contestability period, the insurance company may investigate the claim to ensure all information provided on the application was accurate. Depending on their findings, the insurer might deny the payout if they determine any details were misrepresented.
If you die while participating in an illegal activity, the insurers may also refuse to pay the death benefit.
Murder
As mentioned earlier, if a beneficiary is responsible for the insured person’s murder, they are legally barred from receiving the death benefit or any financial assets tied to the estate under the ‘Slayer Rule’. This rule prevents a payout to anyone involved in, or closely connected to, the murder of the insured. In such cases, the death benefit is not forfeited but instead paid to the contingent (or secondary) beneficiaries listed on the policy, or, if no alternates are named, to the insured’s estate.
Lying/Committing Insurance Fraud
If you’re not upfront about high-risk hobbies, medical conditions, travel plans, or family health history when applying for coverage, the insurer may deny your beneficiaries the death benefit. Withholding important details can be considered insurance fraud. To avoid any issues with your policy’s payout, it’s essential to be honest and thorough on your application.
Dangerous/Risky Hobbies
If you pass away while engaging in a high-risk activity—such as flying a private plane, bungee jumping, or scuba diving—your insurer may not pay the death benefit, depending on your policy’s terms. For activities deemed especially risky, the insurer may include an exclusion clause that blocks payment if death occurs during such activities. For example, private pilots may need an aviation exclusion rider, which would prevent a payout if they die in a flying accident. Any exclusion riders will be disclosed before your policy takes effect, so your loved ones will be aware of these details in advance.
Rare Cases: Death in War/Act of Terrorism
In rare cases, life insurance policies may exclude coverage if death occurs due to an act of war or terrorism, meaning the insurer might not pay the death benefit. However, this exclusion is less common in life insurance than in other types of coverage, and again this is why we cannot stress enough the importance of an experienced broker who can explain all these things to you. For active military members, eligibility for private life insurance can depend on deployment status, so it’s best to ask an insurance broker if you have questions about this exclusion.
References https://www.investopedia.com/which-types-of-deaths-are-not-covered-by-life-insurance-5094285
https://www.policygenius.com/life-insurance/reasons-life-insurance-wont-pay-out
https://www.marketwatch.com/guides/life-insurance/life-insurance-contestability-period
https://www.empower.com/the-currency/life/unclaimed-money-from-deceased-relatives
Contestability period vs suicide clause: what’s the difference?
Many deaths not covered by life insurance come down to two timing rules that people often mix up. They are separate rules, and they can run for different lengths of time.
The contestability period is the window when the insurer can challenge the policy because of errors or omissions on your application. In Massachusetts, M.G.L. c.175 §132 requires that a policy become incontestable after it has been in force during the insured’s lifetime for two years from the issue date. Nonpayment of premium is an exception.
The suicide clause is an exclusion for suicide during a set period after the policy starts. Its length is set by the contract and by state law. Colorado, for example, sets a shorter limit. Under C.R.S. §10-7-109, suicide after the first policy year can’t be used as a defense against paying a life insurance policy. That rule does not apply to accident-only coverage.
What happens to the premiums? Texas’s Office of Public Insurance Counsel says the insurer will refund premiums if it does not pay the death benefit because of suicide. It also says premiums must be refunded if the insurer denies a claim during the two-year period.
What counts as a material misrepresentation?
A wrong answer on an application is the most common reason a death in the first two years gets a closer look. But not every mistake lets the insurer deny a claim.
In Massachusetts, M.G.L. c.175 §186 says a misstatement does not void a policy unless it was made with actual intent to deceive or it increased the risk of loss. For health answers on life policies, a misstatement is material if knowing the truth would have changed the insurer’s decision to issue the policy, its view of the risk, or the premium.
Examples of answers that can be material (for illustration, not a list from any one insurer):
- Leaving out a recent diagnosis, such as heart disease or cancer
- Saying “non-smoker” when you smoke or vape
- Not listing a prescribed medicine or a recent hospital stay
- Leaving out a DUI or a dangerous hobby the application asked about
- Wrong age. In Massachusetts, §132 says the benefit is adjusted to what the premium would have bought at the correct age, rather than denied.
A small slip, like a misspelled doctor’s name, is usually not material. When in doubt, disclose it and let the insurer decide.
Accidental death policies vs life insurance
Some deaths not covered by life insurance turn out to involve a different product: accident insurance. Families sometimes believe a parent had “life insurance,” when the policy was accidental death only.
An accidental death policy, or AD&D, pays only when death results from a covered accident. Death from illness, such as cancer, a stroke or a heart attack, is not an accident, so the policy pays nothing. Many accident policies also list their own exclusions, so read the definitions page.
Regular life insurance pays for death from illness or accident, subject to the exclusions in the contract. Here is a quick way to tell them apart:
- Look at the policy title and the “benefit” section. Words like “accidental death” or “accidental means” point to accident-only coverage.
- If there were no health questions, confirm whether it is guaranteed issue life insurance or accident-only coverage.
- Check if it was a rider. An accidental death rider pays extra on top of a life policy; it is not the base coverage.
Learn more in our guide to accidental death and dismemberment insurance.
Graded benefit policies: deaths in the first two years
Guaranteed issue and some simplified issue policies use a graded or modified death benefit. For a set period after the policy starts, a death from natural causes pays a reduced amount instead of the full face amount. After that period, the full benefit applies.
States limit how long this can last. Missouri’s rule, 20 CSR 400-1.040, is a clear example:
- Graded policies must be sold on a guaranteed issue basis or with liberal underwriting.
- For issue ages up to 65, grading can’t last more than three years. For ages 66 to 75, the limit is two years.
- Those limits don’t apply if the policy pays at least 50% of the full face amount as a first-year death benefit.
- The application must give notice of the graded benefit, and the policy face must tell you to return it within 30 days if you are not satisfied.
The reduced benefit during the graded period varies by policy, so read the benefit schedule. Also see our guide to life insurance with no waiting period if you can qualify for full coverage.
Lapse for nonpayment and grace periods
A policy that lapsed for nonpayment pays nothing. This is one of the most avoidable deaths not covered by life insurance.
Most policies give you a grace period after a missed due date. In Massachusetts, §132 gives 30 days of grace for premiums after the first year. Texas’s OPIC says most policies have a 31-day grace period.
If the policy does lapse, you may be able to reinstate it. Massachusetts law lets you ask for reinstatement within three years of the default, with proof of insurability and payment of overdue premiums plus interest. Answer any reinstatement health questions as carefully as the original application.
To avoid a lapse:
- Pay by automatic bank draft, and update it when you change banks
- Name a secondary addressee, if your insurer offers one, to get a copy of lapse notices
- For cash value policies, ask whether an automatic premium loan option is available
War, aviation and hazardous activity exclusions
Most exclusions for risky activities are not hidden. They show up in one of three ways, and each one changes what your family can expect:
- A higher rate. The insurer covers the activity but charges more. Deaths from the activity are covered.
- An exclusion rider. The insurer issues the policy but excludes deaths from a named activity, such as private flying or a listed sport. A death from that activity is not covered. Other causes are.
- A decline. The insurer won’t issue the policy at all.
If you serve in the military or plan travel to a conflict zone, read the exclusions page for any war or military wording before you buy.
The key point: a rider is part of your contract. Ask your agent to show you every rider and exclusion in writing before the policy is delivered.
What can beneficiaries do if a claim is denied?
A denial is not always final. The NAIC recommends these steps:
- Ask the insurer first. Get the denial reason in writing and ask which policy wording it relies on.
- Gather records. Keep the policy number, letters and bills. Log each contact with the date, time and method.
- File a complaint with your state insurance department. Departments can review claim delays and denials. The NAIC says investigations are free, and most states take complaints online, by mail or by phone.
- Write a factual account. List what happened in order, quote the policy where you can, and say what outcome you want.
The department can send your complaint to the insurer, which must respond. If the insurer acted improperly, the department can require it to fix the problem. The NAIC also notes that an insurer can’t retaliate against you for filing. For large claims, a lawyer who handles life insurance disputes can also help.
Not sure a policy exists? Use our guide to finding a lost life insurance policy.
How to avoid deaths not covered by life insurance: a checklist
- Answer every application question fully. Tell the agent about recent tests, medicines and hobbies.
- Read the copy of your application attached to the policy, and correct mistakes in writing right away.
- Know your dates: when the contestability period and suicide clause end, and whether a graded period applies.
- Confirm whether you own life insurance or accident-only coverage.
- Keep premiums on autopay and check your bank statement each month.
- Name primary and contingent beneficiaries, and update them after marriage, divorce or a death.
- Tell your beneficiaries the insurer’s name and where the policy is kept.
- Review riders and exclusions each time you change jobs, travel plans or hobbies.
Keep Reading: Related Guides
- Is life insurance taxable?
- How to find a lost life insurance policy
- Single premium whole life insurance
- Life insurance contestability period
- How to file a life insurance claim
Deaths Not Covered By Life Insurance: Frequently Asked Questions
What deaths are not covered by life insurance?
Deaths not covered by life insurance typically include suicide within the first two years, death during the contestability period if the application had material misrepresentation, and deaths from excluded activities named in the policy.
What is the contestability period?
The contestability period, usually the first two years, lets the insurer review the application after a death and deny or adjust a claim if important facts were misstated.
Deaths Not Covered By Life Insurance: Next Steps With a Licensed Agent
Questions about deaths not covered by life insurance usually depend on your age, health, state, and budget. A licensed Octans agent can review your situation, compare options from more than 120 carriers, and explain the trade-offs before you decide. Call (617) 935-9220 or request a free quote.
Related guides
Sources: NAIC Life Insurance Buyer’s Guide; NAIC Life Insurance Policy Locator. This article is for general information and is not tax, legal, or medical advice.
About examples and tools: Hypothetical examples, sample rates, calculators and quizzes on this site are for general educational and illustrative purposes only. They are not quotes, offers of coverage, or guarantees of eligibility, approval, price or benefits, and they are not legal, tax, financial or medical advice. The insurance company decides eligibility and price; Medicare rules are set by CMS and the Social Security Administration.