Life Insurance Policies Can be Invalidated

Life insurance is put in place to protect loved ones in the event that the family’s main breadwinner dies prematurely.

What happens, however, if a death is prematurely suspected as being a suicide? Could a life insurance policy that was in place be deemed invalid?

While suicides happen on a regular basis, the thought of whether or not a life insurance policy could be determined to be invalid under the suspicion of suicide comes to light more often when it is a well-known person who dies under mysterious circumstances.

In some instances a life insurance policy can be invalidated if it is proven that the death was not natural.

The trouble begins with references to “an exclusion” that might be discovered in a life insurance contract. An exclusion is simply a circumstance like a particular cause of death or an allegation of fraud, thereby invalidating a claim.

According to many life insurance experts, it is the rare case where life insurance providers turn and fight death claims.

On the flip side, one industry analyst points out that some insurers routinely fight paying claims that occur within the initial two years following the writing of a policy.

Oftentimes, many of the claims insurance companies fight are small policies and the individuals are not poised to fight the insurer. As it turns out, the money is too minimal to interest a lawyer, therefore leaving the individual little ability to fight it.

Industry experts report that exclusions are not as prevalent as they once were.

In previous years, a large number of life insurance contracts included exclusions for deaths resulting from acts of war, commissions of felony or even participation in riots.

In today’s day and age, some of the stranger exclusions may still survive in group insurance, especially where accidental death and dismemberment or AD&D, insurance.

As it turns out, the vast number of life insurance policies includes only a pair of exclusions:

1. Death by suicide. This one is basically straightforward and is intended to stop suicidal individuals from taking out a major life insurance policy to ensure their heirs will receive a million-dollar payout.
2. Material misrepresentation on one’s insurance application. This includes any intentional falsehoods or keeping out important details that an insurer would use to determine whether and at what price to cover the individual.

One industry analyst notes that in general, the life insurance contact will state that the death claims cannot be turned down due to a misstatement of fact after the contract has been in place for more than two years. The only means by which an insurer can contest a claim after that is if the company can prove intentional fraud played a role.

When filing for life insurance be sure that all information is correct and most importantly truthful.