What Types of Death Are Not Covered by Life Insurance?

If you lie or omit something on your life insurance application, it is considered fraud. The life insurer may refuse to pay the life insurance claim if you lie about:

• Family health history
• Your health history, including pre-existing conditions
• Travel plans, especially to dangerous locations
• Risky hobbies or occupation

If you participate in risky hobbies or activities, your death claim may not be covered by life insurance if it is the cause of your death. If you are honest on your application, the insurer may have a separate exclusion to sign as part of the application stating these activities are not covered, which can include:

• Scuba diving
• Flying a private plane
• Bungee jumping
• Hang gliding
• Auto racing
• Rock or mountain climbing
• BASE jumping

Homicide in itself is typically covered by life insurance, but the circumstances surrounding the death may dictate who receives the life insurance payout. If the primary beneficiary murders the insured or is involved in their murder, they are no longer eligible for the death benefit due to the Slayer Rule. Instead, the contingent beneficiaries will receive the death benefit, or it will go to the insured's estate.

Life insurance policies have a suicide clause, which prevents the death benefit payout in the first two years of the policy if the cause of death is suicide. This clause is in place to prevent someone from purposefully dying right after an insurance policy goes into effect. After the two-year window, suicide is typically covered. If the insured dies due to a drug overdose, the insurance company may deny the claim if they can prove the overdose was deliberate.

Some insurance companies may include an exclusion for terrorism or war, although it’s not common. For this reason, active duty military members might not qualify for life insurance, depending on rank and deployment status. If the insured is on active duty, it’s best to speak with an insurance agent to determine which companies do not have this exclusion if you want war or terrorism deaths to be covered.

If you don’t designate a life insurance beneficiary — or they predecease you — the life insurance company may not be able to pay the death benefit directly to a loved one.

• Not naming a beneficiary: If you don’t name a beneficiary, the death benefit proceeds will go to your estate and may be subject to probate. You also can’t control who gets the money.
• Your beneficiary predeceases you: If your beneficiary dies before you, then the money will go to your estate if you don’t have a contingent beneficiary. This is why it’s important to choose more than one beneficiary and update your policy if one of your beneficiaries dies before you.

Life insurance does pay for natural death, including dying from old age or a disease like heart disease or cancer. Dying of natural death means dying from the body shutting down due to an internal factor rather than an external factor, like an injury or accident.

Life insurance does cover accidents, which can include accidental death from overdose, poisoning, drowning, auto accident or other tragic ways to die.

The beneficiary will receive the death benefit in the event of the insured’s murder, but only if the beneficiary did not commit the murder or play a part in it. If it’s found the primary beneficiary is involved in the murder, they are disqualified from receiving the death benefit due to the Slayer Rule. The death benefit then goes to the contingent beneficiary or the estate if there isn’t a contingent. Choosing the right beneficiary is important to ensure your death benefit is used according to your wishes, which may not be the case if the payout goes to the estate.

Once the two-year suicide clause contestability period has expired, death by suicide is typically covered by life insurance, even if it’s an overdose, as long as there is no other clause in the policy that excludes it.

Although pandemics are not new, their uncertainty with life insurance is. Fortunately, most insurers are still paying out pandemic illness deaths as natural causes. However, if you are looking to buy life insurance now, you may have to answer a questionnaire about your health specific to COVID-19. Depending on your responses and the insurance company, this could cause your policy to be delayed, postponed or denied.