Term Life Insurance Articles
Behaviors & Activities That Could Cancel Your Life Insurance Payout
2009-12-24
A life insurance policy can be an excellent source of much-needed resources during times of emergency. Incredibly enough, many policyholders choose to take their insurance policy for granted, something that could lead to unnecessary problems later on. If you think that an increase in life insurance rate would be the simplest of consequences to ignoring the terms in a policy, you are wrong. A life insurance policy, even if it's a term life insurance, still has clauses that allow the insurance company to nullify your account for cause. There are behaviors and activities that could cancel your life insurance payout and deny you or your beneficiaries the benefits you paid for.
Probably the most common clause you'll find in insurance policies is one which allows the insurance company to refuse whole life or term life insurance payout in case of death due to self-inflicted injury. This can include drunk driving, driving under the influence of illegal drugs and auto-erotic asphyxiation. Behaviors such as these have been the subject of past litigations where insurance companies were successful at refusing payment to beneficiaries.
Dangerous behavior is also a major justification that allows insurance companies to cancel your insurance payout. Engaging in deliberate acts of carelessness or participating in high-risk sports and/or hobbies without expressly informing your insurance company can also render your policy and its benefits null and void. There is, however, available coverage for individuals who engage in dangerous sports or are employed in high-risk jobs. The catch is that they only have to be truthful about their occupations, hobbies and interests at the time of application. Most insurance companies will also prohibit any payout claims if death is caused by suicide, although a period of exclusion is allowed. If, for example, the policy holder was sufficiently judged rational at the time of the insurance purchase and then commits suicide within two years of the issue date, the payout will be cancelled. Beyond two years, the proceeds will be released to the beneficiaries. The exclusion is meant to prevent individuals from purchasing insurance policies with the intention of committing suicide later.
The deliberate act of withholding mandatory personal information could also lead to the cancellation of an insurance payout. If, for example, you fail or choose not to inform your insurance company of existing illnesses or health conditions that can affect your eligibility, you or your beneficiaries could be refused payout. Little white lies on your part regarding your health condition (including medical history, existing health concerns, habits, vices, chronic problems, addictions, etc.) could also be used to cancel an insurance payout. Most insurance policies will include a clause that will require you to disclose pre-existing conditions you might have. This clause will protect them against any litigation that may arise from you or your beneficiaries due to non-payment.
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A life insurance policy can be an excellent source of much-needed resources during times of emergency. Incredibly enough, many policyholders choose to take their insurance policy for granted, something that could lead to unnecessary problems later on. If you think that an increase in life insurance rate would be the simplest of consequences to ignoring the terms in a policy, you are wrong. A life insurance policy, even if it's a term life insurance, still has clauses that allow the insurance company to nullify your account for cause. There are behaviors and activities that could cancel your life insurance payout and deny you or your beneficiaries the benefits you paid for.
Probably the most common clause you'll find in insurance policies is one which allows the insurance company to refuse whole life or term life insurance payout in case of death due to self-inflicted injury. This can include drunk driving, driving under the influence of illegal drugs and auto-erotic asphyxiation. Behaviors such as these have been the subject of past litigations where insurance companies were successful at refusing payment to beneficiaries.
Dangerous behavior is also a major justification that allows insurance companies to cancel your insurance payout. Engaging in deliberate acts of carelessness or participating in high-risk sports and/or hobbies without expressly informing your insurance company can also render your policy and its benefits null and void. There is, however, available coverage for individuals who engage in dangerous sports or are employed in high-risk jobs. The catch is that they only have to be truthful about their occupations, hobbies and interests at the time of application. Most insurance companies will also prohibit any payout claims if death is caused by suicide, although a period of exclusion is allowed. If, for example, the policy holder was sufficiently judged rational at the time of the insurance purchase and then commits suicide within two years of the issue date, the payout will be cancelled. Beyond two years, the proceeds will be released to the beneficiaries. The exclusion is meant to prevent individuals from purchasing insurance policies with the intention of committing suicide later.
The deliberate act of withholding mandatory personal information could also lead to the cancellation of an insurance payout. If, for example, you fail or choose not to inform your insurance company of existing illnesses or health conditions that can affect your eligibility, you or your beneficiaries could be refused payout. Little white lies on your part regarding your health condition (including medical history, existing health concerns, habits, vices, chronic problems, addictions, etc.) could also be used to cancel an insurance payout. Most insurance policies will include a clause that will require you to disclose pre-existing conditions you might have. This clause will protect them against any litigation that may arise from you or your beneficiaries due to non-payment.
