Fact checked by Betsy Petrick
Life insurance helps support your loved ones financially if you die, but some causes of death, like suicide, committing a crime, or engaging in dangerous sports, might not be covered. It’s important to read your policy carefully to know what could affect the payout.
Life Insurance Exclusions: What’s Not Covered?
Exclusions are conditions in life insurance contracts that prevent the insurance company from paying out the death benefit to your beneficiary(s). These excluded situations may be listed in the conditions, definitions, or fine print of the insurer’s contract.
To ensure you get the most out of your insurance policy and protect your loved ones, thoroughly review your contract in its entirety and ask questions if you don’t understand the covered events and exclusions.
To get you started, we’ve listed some of the most common exclusions.
Suicide Clause
Most life insurance policies include a suicide clause, which means if the insured person dies by suicide within a specific period, usually the first two years of the policy, the insurer typically won’t pay the death benefit.
However, if you live in Colorado, Missouri, and North Dakota, this period is shorter, meaning you won’t get paid if the insured individual dies by suicide within one year of taking out their insurance policy.
Death Due to Criminal Activity
An insurance policy will not pay the beneficiaries the death benefit if the insured engages in criminal activities that lead to death. Exclusions of this kind include death related to:
- Drug trafficking
- Armed robbery
- Fleeing from the police
- Murder
- Driving under the influence
The insurance may also exclude minor incidents, including protests and trespassing, if they result in death.
Act of War or Terrorism
Your policy will likely exclude the death benefit if you die as a result of any act related to war or terrorism. Typically, insurance companies will not cover deaths related to:
- Insurrections
- Rebellions
- Revolutions
- Declared wars and undeclared wars
- Terrorist acts
Insurers have these exclusions because losses related to these acts can be unpredictable, making it challenging for insurers to accurately price their premiums around them.
High-Risk Factors
Your insurance company can refuse to pay the death benefit if your death has resulted from a high-risk activity that may include:
- Hobbies: High-risk adventure sports, such as skydiving, rock climbing, scuba diving, bungee jumping, and motorcycle racing
- Occupations: Dangerous professions like firefighting, logging, and some forms of construction
Fraud or Misrepresentation
When you sign up for a life insurance policy, you must provide accurate information on your application so the insurance company can assess the risk and determine your premiums and appropriate coverage. As a result, you must provide straightforward information about your health and lifestyle, and the insurer may require you to get a medical examination to verify your answers.
The insurance company will not pay out the death benefit if they determine you omitted information or lied on your application, such as not disclosing that you smoke or have a pre-existing medical condition, like heart disease or cancer.
The company may also investigate the death of an insured individual before paying out a death benefit by reviewing lab results and prescriptions.
Substance Abuse
Insurers commonly refuse to pay out insurance policies if you die as a result of drug or alcohol abuse, even if it’s indirectly related to drugs or alcohol. For instance, your insurance company may deny the death benefit to your beneficiaries if you have alcohol in your system and die as a result of a fall.
Travel to Restricted Countries
Your coverage may be voided if you die while traveling to certain countries. For instance, if you die while traveling in areas where conflict or civil unrest exists, your beneficiaries could be denied a claim. As a result, it’s essential to review your life insurance policy before making travel plans to high-risk countries.
How to Ensure Your Insurance Company Won’t Contest Your Family’s Claim
Be honest, transparent, and upfront on your life insurance application to ensure that your insurance company doesn’t deny the claim and your beneficiaries receive your death benefit.
Read your contract thoroughly, including the fine print. Highlight any areas of concern and ask your insurance agent for clarification.
Consider purchasing additional coverage to your existing policy, called riders. For instance, if you are an active military member or participate in a high-risk sport, you may be able to purchase a rider to ensure coverage. Keep in mind that your monthly premiums will increase.
Review the policy regularly to ensure that the insurer and the contract continue to meet your needs and those of your beneficiaries.
The Bottom Line
Insurance companies use policy exclusions as a form of risk management. They also help insurers prevent fraud and keep insurance affordable for consumers. As a consumer, it’s important to review the contract to understand how your policy exclusions work. Also, speak with your beneficiaries to help them understand what to expect and let them know that they can appeal the insurer’s decision if they believe a claim was unfairly denied.
