Term life insurance provides financial protection for your loved ones should you die unexpectedly. However, sometimes policies don’t cover every situation.
Here is a list of conditions that are generally excluded or Are not Term life insurance:
Lie in your application
If you lie or fill out false information on a life insurance application about your age, medical history, height, weight, hobbies, travel, or drug/alcohol/tobacco use, the insurance company may deny future claims and refuse to pay your beneficiaries. When signing up for life insurance, honesty really is the best policy!
Not paying your premiums
If you don’t make the required payments on your term life insurance, your policy may expire after the stated grace period, which is usually 30 days after the payment is due. Schedule your payments as you make any other bills in the household so you don’t miss any.
Engaging in criminal activity
Term life insurance will not cover you if you die while committing a crime (e.g. a robbery).
Died for murder
Often referred to as the homicide rule, an insurance company will not pay the proceeds of your policy to someone who is involved in your death. The company will instead pay your backup beneficiary, or your assets, if you don’t list a backup beneficiary on your application.
Engage in extremely dangerous hobbies
If you die while doing something risky, such as skydiving, bungee jumping, auto racing, sword swallowing, etc., your life insurance company may not pay your claim . So it’s best to check the terms and exclusions of your insurance policy before You decide to take on a dangerous hobby.
Take your own life
To prevent people from taking their own lives, many individual term life policies will not pay a death benefit if the insured commits suicide within the first two years of the policy being purchased. (If suicide occurs, the beneficiary can only receive the amount paid for the premium.)
Having complications during childbirth
Sadly, term life insurance may not pay your beneficiaries if you die from complications during pregnancy and childbirth.
Do not list beneficiaries on your policy
If you do not list who will receive money from your term life insurance, the company will allocate that amount to your estate and the court will decide who will receive the property. (This situation would also apply if the beneficiary you listed was not alive at the time of your death.) So make sure you designate who will receive the money and review and update the list from time to time. Book your beneficiaries to make sure this situation doesn’t happen.
