With life insurance, someone makes premium payments over a period of time in exchange for monetary compensation to the beneficiaries when the policyholder dies. The person who initiates the policy can choose the specifics of how they want to pay premiums and what type of coverage they want.
There are different types of policies. Term life insurance is one of the most commonly selected; it offers protection for a set time period. There are also permanent life insurance policies which include whole and universal life. With these policies, coverage lasts for a lifetime. Health, lifestyle, and medical history are factors that can be used to determine the cost of a policy.
There are certain situations where life insurance isnâ€™t paid out. For example, in the case of suicide, most policies wouldnâ€™t pay the death benefit to the beneficiary. If someone got an insurance policy and they werenâ€™t honest about somethingâ€”for example, they lied about not smokingâ€”then that might be considered insurance fraud and the policy might be canceled, or the insurance money might not be given to the beneficiary.
So what about a case where the insured person is murdered? In many cases when there is a homicide, the policy is still paid out to the life insurance beneficiary, but there can be exceptions depending on the particulars of the situation.
It would be frustrating to have someone pay a life insurance policy for many years, only to have his or her beneficiary not receive the payout upon death. As was already touched on, suicide typically isnâ€™t covered, and sometimes death isnâ€™t covered if it occurs while the person is committing a crime, such as drinking and driving.
If you are in the process of comparing policies, you should also look for one that covers any accidental death or health-related death. There are some policies that will also cover suicide, after the first two years.
You have to read the fine print and understand the different life insurance benefits before deciding which policy is right for you.
If death occurs during the first two years after the policy is issued, many companies have whatâ€™s called a contestability period. This means the company has the right to investigate the cause of death and obtain certain information such as an autopsy, toxicology report, and medical records.
When youâ€™re choosing a policy, even if something isnâ€™t necessarily covered such as murder, you can have it added for an extra cost.
Sometimes people are afraid to ask their insurance agents about how a murder is handled, but they shouldnâ€™t be. Itâ€™s not an uncommon question, and itâ€™s an important one to get information about when discussing life insurance quotes.
If the beneficiary of a policy is believed to be the one who murders the policyholder, then thereâ€™s a strong chance they wonâ€™t receive the life insurance money. Sometimes, even if a beneficiary is tried for the murder of the policyholder and they arenâ€™t found guilty, the insurer might take them to court if they feel thereâ€™s evidence that links them to the murder. Itâ€™s less difficult in civil court than criminal court to find someone liable for a death.
If someone dies doing a dangerous or illegal activity, such as drinking and driving, his or her beneficiary might not receive a payout.
If you die because youâ€™re committing a robbery, trespassing, or youâ€™re part of gang activity, itâ€™s unlikely your beneficiary is going to receive the life insurance payout. There may also be loopholes for the insurance company to avoid paying if you move out of the country and your death occurs.
If an insurance company has any reason to believe fraud could have occurred, they can investigate. Depending on their findings, they can refuse to pay beneficiaries. With a life insurance policy, itâ€™s best to be completely honest and transparent from the start. Otherwise, you may end up paying premiums on a policy that eventually has no benefit for your loved ones.
We already briefly discussed that many life insurance policies wonâ€™t pay out if someone commits suicide. However, it can sometimes be difficult to prove that a death was a suicide, so there are instances where beneficiaries do receive the lump sum payout. Also, if someone has had their life insurance policy for more than a two-year period, there may be a payout even if they commit suicide.
If a life insurance policyholder is murdered, it does not mean his or her beneficiary wonâ€™t receive the money from the policy. In fact, most murders are covered. The only time that beneficiaries wouldnâ€™t receive a payout in the event of the policyholderâ€™s murder would be if the insurance company investigated the death claim and found there was fraud or criminal activity, or the beneficiary was the one who committed the murder.
Before submitting a life insurance application, itâ€™s very important to read the fine print and ensure you know what the insurance covers. Donâ€™t be afraid to ask the insurance agent any questions you may have.