Term Life Insurance Articles
Can An Insurance Company Cancel Your Life Insurance Policy If You Get Ill?
2009-11-29
When researching a life insurance quote, it's valid to question the different elements of the policies that you're looking at. You might ask under what circumstances your insurer might be able to legally avoid paying out on your policy after you die. This is a common concern, especially among older term life insurance buyers. These policyholders often wonder whether the insurance company can cancel their policy if they should be diagnosed with a certain type of illness or disease.
Of course, the entire point of a life insurance policy is to protect the beneficiaries of the policyholder in the event of death, and serious illness very often precedes death. Because of this, a term life insurance policy is fairly useless if it can be canceled due to a serious illness. Some states and governments outright ban life insurance companies from canceling a policy due to illness, though most often it's the insurance contract itself that prevents an insurer from canceling a policy. Life insurance contracts will state the terms for "exclusion" of payment, and will also often state quite clearly that neither party has the right to cancel the contract due to an illness. Once exception to this is when the policyholder has to cancel the policy due to an inability to pay his or her premiums.
There are some cases in which an insurer could legally (and according to contract terms) cancel a term life insurance agreement once the policyholder becomes ill, but they're very specific situations. For example, if the policyholder had a terminal illness before the contract was ever signed and he did not disclose that information to the insurance company, there might be grounds for the invalidation of the contract. With that being said, if the policyholder himself didn't know about the disease (but still had the disease) when the contract was signed, the contract would probably still be valid.
It's important to read any life insurance contract carefully before you sign it. This will give you an idea of all the circumstances where payment on your policy might be excluded. Most of these exclusions relate to death due to suicide or a dangerous activity. For example, if you were to die while skydiving, your insurer wouldn't pay your beneficiaries. If you don't understand part of your contract, ask an insurance agent or lawyer. Occasionally, they might give some circumstances in which a known illness could complicate payment. On the whole, however, life insurance policies are typically very safe documents when it comes to illness and death. Be rest assured that it's extremely unlikely that an insurer will have the legal right to cancel your policy if you become ill.
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When researching a life insurance quote, it's valid to question the different elements of the policies that you're looking at. You might ask under what circumstances your insurer might be able to legally avoid paying out on your policy after you die. This is a common concern, especially among older term life insurance buyers. These policyholders often wonder whether the insurance company can cancel their policy if they should be diagnosed with a certain type of illness or disease.
Of course, the entire point of a life insurance policy is to protect the beneficiaries of the policyholder in the event of death, and serious illness very often precedes death. Because of this, a term life insurance policy is fairly useless if it can be canceled due to a serious illness. Some states and governments outright ban life insurance companies from canceling a policy due to illness, though most often it's the insurance contract itself that prevents an insurer from canceling a policy. Life insurance contracts will state the terms for "exclusion" of payment, and will also often state quite clearly that neither party has the right to cancel the contract due to an illness. Once exception to this is when the policyholder has to cancel the policy due to an inability to pay his or her premiums.
There are some cases in which an insurer could legally (and according to contract terms) cancel a term life insurance agreement once the policyholder becomes ill, but they're very specific situations. For example, if the policyholder had a terminal illness before the contract was ever signed and he did not disclose that information to the insurance company, there might be grounds for the invalidation of the contract. With that being said, if the policyholder himself didn't know about the disease (but still had the disease) when the contract was signed, the contract would probably still be valid.
It's important to read any life insurance contract carefully before you sign it. This will give you an idea of all the circumstances where payment on your policy might be excluded. Most of these exclusions relate to death due to suicide or a dangerous activity. For example, if you were to die while skydiving, your insurer wouldn't pay your beneficiaries. If you don't understand part of your contract, ask an insurance agent or lawyer. Occasionally, they might give some circumstances in which a known illness could complicate payment. On the whole, however, life insurance policies are typically very safe documents when it comes to illness and death. Be rest assured that it's extremely unlikely that an insurer will have the legal right to cancel your policy if you become ill.
