Many people may believe that life insurance covers any death, for any reason. However, life insurance coverage may not pay out for all kinds of deaths.
The Two Main Types of Life Insurance
Term life insurance remains in place for a certain period of time, usually from five to 30 years. If you die before the term ends, your beneficiary will receive a payment from the life insurance company. If you do not die during the term, no one will receive any payment.
With term life insurance, you may be able to convert your policy to a permanent (whole life) policy at the end of the term.
Whole life insurance, also known as permanent life insurance, is a type of insurance you have for the rest of your life as long as you continue paying your premiums. When you have whole life insurance and you pass away, your beneficiary will receive a payout.
Does Life Insurance Cover Any Death?
It’s important to understand life insurance policies contain many provisions that stipulate the terms you must meet for a death benefit to be paid. Life insurance typically covers death due to natural causes, accidents, or illnesses like COVID-19.
Below is a general overview of the different types of death that may be covered under your life insurance:
- Natural Causes & Illness: Life insurance will cover deaths that result from natural causes. There are a wide range of natural death causes, including heart attack, stroke, cancer, pneumonia, an infection, or simply old age. Illnesses that result in death are considered a natural cause. This includes illnesses like COVID-19. If you die from an illness, your beneficiary is entitled to your death benefit.
- Accidents: Life insurance also covers accidental deaths, such as motor vehicle accidents, falls, drowning, poisoning including a drug overdose, fires, suffocation, machinery accidents, and other tragedies. If you die as the result of an accident, your beneficiary may receive a payout.
- Murder: No one wants to think about dying as the result of violence, but homicide in the United States is becoming more common. During 2020, the rate of murders increased throughout the United States. Murder is usually covered by life insurance, with a few exceptions. A life insurance policy may not pay out for murder if the beneficiary is the murderer. Even if the beneficiary is suspected of the murder but not convicted, it could inhibit their ability to receive the full death benefit. In addition, if the murder is related to the insured individual participating in illegal or highly dangerous activity, like drunk driving, buying or selling drugs, or being involved in gang activity, the beneficiary may not receive a full payout.
- Suicide: While murder doesn’t even make the list of top 50 reasons people die, suicide is the 10th leading cause of death in the United States. Though many life insurance policies will pay out if the policyholder dies from suicide, many life insurance policies have an exclusion period. The exclusion period is usually around two years. During this time, if the policyholder dies from suicide, a death benefit will usually be limited to the total premiums paid, minus any outstanding loans on the policy. If the policyholder dies from suicide after the exclusion period, a death benefit will typically be paid.
Before purchasing life insurance, be sure you understand all the clauses or provisions of your policy. If you have any questions, ask your agent.
Turn to Americo Senior Life for Your Whole Life Insurance Needs
The end of life is an inevitable reality for everyone. For most people, there are also significant costs associated with the end of life. Funerals, medical bills, debts, and other financial obligations can leave your family feeling overwhelmed.
Relieve your family of the financial burden of paying your final expenses and purchase by purchasing a whole life insurance policy from Americo. You’ll have your policy for the rest of your life and all you have to do is keep paying your premium. You can get a quote in minutes. Find out how we can secure your financial future by getting approved online today.