Many people are aware that life insurance companies may or may not cover a person due to a terminal illness. However, there are other exclusions they have such as death via suicide, being a smoker, the term of the policy, and illegal activities. Read on to discover why life insurance companies have the right to deny coverage.

Life Insurance

You Commit Suicide

There are many people who feel there is no way out of a financial jam. As they feel there is nowhere left to turn to, they may increase their life insurance policy in hopes to protect their family’s financial future and commit suicide. Insurance companies can lose millions a year from these circumstances, and they are likely to decline payment to the beneficiaries. Most insurance companies have a clause that the insured have had that policy in place for two to three years before paying out on the policy.

Falsifying If You Are a Smoker

When it comes to life insurance, there is no such thing as a little white lie. You may consider yourself a non-smoker if you only smoke one cigarette a week, or it’s been a few years since you’ve quit smoking. However, the life insurance company wants to know that history. A non-smoker is considered to have a longer lifespan, thus making their premiums less expensive than a smoker. So upon your death, if it’s revealed that you were a smoker and omitted that information, the insurance company could argue that that played a factor in your death.


A Lapsed Policy

A lapsed insurance policy is when your policy has expired, such as due to non-payment. Should you pass on just a day after your policy has expired, your policy is void, and the insurance company does not have to pay your death benefit. You’ll find this more common on term life insurance policies that are for five or ten-year terms. In some cases, the family may be eligible to receive the paid up portion of the policy.


If You Die Participating in an Illegal Activity

As pretty straight forward as this may seem, some families have tried to appeal a denied claim for their loved one who died while participating in an illegal activity. The insurance company could deny the claim if they died due to the crime, such as getting shot while robbing a bank. They could also deny the claim if they had a heart attack while trespassing on someone’s property.