We've all heard the rumors, we've all read online problem reports, we've all held that fear somewhere inside us and wondered: What if, for just one reason or any other, my life insurance policy doesn't shell out?
First, let's stop you immediately. That hardly ever happens.
Your insurer will almost certainly meet its obligations. In addition, we'd hope your policy is issued and backed by an insurer having a long and reliable history.
That said, to help address any remaining concerns, we thought we'd set the record straight on when and why your insurer might contest a claim.
When you've lied in your application
If we've said it once, we've said hello a thousand times: Be honest and transparent when applying for life insurance coverage. Besides this ensure that you get the most accurate possible rate, it may also help be certain that all your family members have a secure back-up in case of the unexpected. Should you omit or mispresent information in your application, that could impact whether your beneficiaries are entitled to your policy's death benefit.
This is especially true when it comes to illnesses, or high-risk habits (for example smoking) that may cause illness. For example, most insurers wouldn’t shell out should you died of undisclosed cancer that was diagnosed before the policy was issued, or if you died while taking part in an undisclosed risky hobby (say, regularly skydiving) you had been participating in prior to the policy was issued. If this happens to be the case, the premiums you paid could be returned-effectively rendering the problem just like you never got insured in the first place.
In the big event of suicide inside the first couple of years of your term
If an insured commits suicide inside the first two years following the policy is disseminated – also known as the contestability period – an insurer will likely not spend the money for death benefit as many policies contain a suicide exclusion. (Even though we're on the subject, suffice to say that people would urge you to identify counseling and resolve the situation one other way if this sounds like something you have been considering. Start by likely to suicidepreventionlifeline.org.)
A contestability period is something designed by the to safeguard insurers from being defrauded. Typically, unless there is a reason to suspect fraud, claims are often not contested after this period, once the larger burden of proof shifts to the insurer as opposed to the insured.
Keep in your mind that if your policy would lapse at some point during your term, it is possible the contestability period would restart.
Death during an act of war- Or while in outer space
Looks like we're right down to the “very unlikely scenarios” part of our discussion. In terms of war: Some insurers' policies make an exclusion for acts of war that kill civilians. However, MassMutual (the company that owns Haven Life and issues the Haven Term policy) does not. We're all hoping this one never comes up.
As for outer space – [deep breath]… For whatever reason, people ask about this. Not really a lot, but a lot more than you would've ever expected in a million years. For the time being, the Haven Term policy does not mention space specifically, but between SpaceX and also the supposed space force, maybe it might eventually in the future. For now, it will remain in the final frontier- for the insurance industry.
Although we've identified several scenarios, it certainly is a good idea to review your policy carefully to see if there are other types of exclusions that could change up the payment of the claim. Call customer support. Print your policy documents to see by the pool (okay, not this one). But simply make sure you're in the know when it comes to your lifetime insurance.
