Most life insurance policies are designed to pay out a death benefit in the event that the person covered by the policy dies while the policy is in effect. However, there are certain things that almost all life insurance policies list as exclusions to their policies. You should read your life insurance policy carefully to determine exactly what is and is not covered, then explore your options for additional coverage.
Suicide: Most life insurance companies will not pay out a death benefit for a suicide that occurs within the first two years of the issuance of the policy. This exclusion is listed in order to deter people from purchasing a policy with the specific intent to commit suicide. If a death is determined to be a suicide after the first two years of the issuance of the policy, it becomes the life insurance company’s problem to prove that suicide was the intent all along. Life insurance companies will most likely investigate any suicide. Even if they can’t prove suicide as the intent behind the purchase of the policy, they may still be able to deny payment on the policy if they can prove material misrepresentation.
Aviation: Many life insurance companies list death as a result of aviation in a private plane as an exclusion on their policies. For this exclusion it doesn’t matter if you are the pilot or passenger. The reason behind this exclusion is the guidelines that private planes have to follow are not regulated as strictly as the ones for commercial airlines. Life insurance companies are very cautious when it comes to private plane crashes and the circumstances surrounding them.
Dangerous Activities: These are another typical exclusion for most life insurance companies. They usually include bungee jumping, rock climbing, scuba diving, racing, and hang gliding. Depending on the life insurance company, other activities may also be listed as exclusions. Certain life insurance companies will even go so far as to list sports that they consider dangerous, such as rugby, as an exclusion to their policies.
War: An act of war, on either foreign or domestic soil, is typically not covered by most life insurance companies. This may seem unfair, but to life insurance companies that’s more risk than they can safely take. The amount of money that a life insurance company would have to pay out as the result of war time deaths would bankrupt most of them. This exclusion is clearly an issue for members of the military. However, the U.S. military typically offers a special type of insurance for its members.
If you are concerned about not being covered for exclusions listed in your policy there are other options to consider. There are life insurance companies that specialize in selling high risk policies that cover exclusions such as those listed here, with the exception of suicide. These typically have much higher rates because of the increase in risk to the insurance company. Another option is to buy a rider to your existing life insurance policy. Riders give you the flexibility to cover specific activities that you engage in without an exclusion of coverage for that activity. For example, if you know that your policy excludes death as a result of engaging in rock climbing, you can purchase a rider to your policy that covers death as a result of rock climbing. Riders are typically more expensive than a traditional policy because of the increase in risk for the life insurance company. However, adding a rider to your existing policy should still cost less than buying a specialized policy that covers all types of typical exclusions.