Term Life Insurance Articles
The Standard Terms Of A War Clause In A Life Insurance Contract
2011-08-16
A life insurance contract will usually have a few clauses that prevent a payout due to certain circumstances. These clauses are termed exclusions, and they're regulated by law. One common and completely legal type of exclusion is a war clause, which saves a life insurance company from paying out on a policy holder's death if the policy holder died due to an act of war. A war clause can significantly affect the value of a life insurance contract under certain circumstances.
The purpose of a standard war clause is to save a life insurance company from excessive losses. If a war drove millions of Americans to take out life insurance policies, a life insurance company could experience unsustainable losses, which could quickly bankrupt the company. Establishing a war clause helps to prevent this and saves the life insurance company from potentially dire straits during a war.
Most war clauses only apply to deaths in active combat, not to deaths that occur during wartime for any reason whatsoever. For instance, a terrorist attack on a civilian target wouldn't usually mean a lack of payout--most 9/11 victims' families were able to get life insurance payouts, for instance, as their deaths didn't result from active combat. While an act of war from an invading country might fall under a war clause, some war clauses are far more specific and apply only to combatants. Even so, a war clause can seriously limit the value of a policy for a military buyer. Many members of the military look for a life insurance policy specifically because of their occupations; it doesn't make much sense to pay for a life insurance policy if one of the primary potential threats to a policy holder's life will invalidate a payout.
The good news is that in many instances, a life insurance contract won't have a war clause, and if there is such a clause, an insurance agent should explain it fully if the buyer is a member of the military. Insurance companies are generally moving away from standard war clauses because they're unpopular with customers and can lead to bad PR for the insurance provider. Even so, military buyers should be careful to check their life insurance policies for war clauses. A policy with such a clause should be immediately re-evaluated. Members of the military should also be careful to keep war clauses in mind when shopping for life insurance policies online, as some insurance quotes won't say outright which types of exclusions are written into a policy. Carefully reading through a contract before making a purchase is the best way to fully understand a term life insurance policy.
Free Insurance Quotes
A life insurance contract will usually have a few clauses that prevent a payout due to certain circumstances. These clauses are termed exclusions, and they're regulated by law. One common and completely legal type of exclusion is a war clause, which saves a life insurance company from paying out on a policy holder's death if the policy holder died due to an act of war. A war clause can significantly affect the value of a life insurance contract under certain circumstances.
The purpose of a standard war clause is to save a life insurance company from excessive losses. If a war drove millions of Americans to take out life insurance policies, a life insurance company could experience unsustainable losses, which could quickly bankrupt the company. Establishing a war clause helps to prevent this and saves the life insurance company from potentially dire straits during a war.
Most war clauses only apply to deaths in active combat, not to deaths that occur during wartime for any reason whatsoever. For instance, a terrorist attack on a civilian target wouldn't usually mean a lack of payout--most 9/11 victims' families were able to get life insurance payouts, for instance, as their deaths didn't result from active combat. While an act of war from an invading country might fall under a war clause, some war clauses are far more specific and apply only to combatants. Even so, a war clause can seriously limit the value of a policy for a military buyer. Many members of the military look for a life insurance policy specifically because of their occupations; it doesn't make much sense to pay for a life insurance policy if one of the primary potential threats to a policy holder's life will invalidate a payout.
The good news is that in many instances, a life insurance contract won't have a war clause, and if there is such a clause, an insurance agent should explain it fully if the buyer is a member of the military. Insurance companies are generally moving away from standard war clauses because they're unpopular with customers and can lead to bad PR for the insurance provider. Even so, military buyers should be careful to check their life insurance policies for war clauses. A policy with such a clause should be immediately re-evaluated. Members of the military should also be careful to keep war clauses in mind when shopping for life insurance policies online, as some insurance quotes won't say outright which types of exclusions are written into a policy. Carefully reading through a contract before making a purchase is the best way to fully understand a term life insurance policy.
