What Can Void a Life Insurance Policy?

Some circumstances can void the life insurance policy. The majority don’t know about the actions that can deprive their loved ones of life insurance benefits. Awareness of such situations can help people avoid them.

Suicide

Suicide can void a life insurance policy. An insurance company may not pay the death benefits if the policyholder commits suicide. So, if he commits suicide within the first two years of enrollment, his beneficiary will not get the intended death benefits.

The applicant agrees to the incontestability clause when applying for the insurance policy. However, it states that the company can deny the death benefits if the insured takes his life within the first two years of signing the agreement. It protects companies against those who intent to get massive insurance policies to commit suicide afterward.

Giving false information

If you die within the first two years of the insurance policy, the insurance company will investigate the cause of your death. It will compare its findings with the information stated on the application form. If you misstated the facts, your dependents would have to pay the cost.

This information needs to be material. So, material information is the one that would have changed the terms of engagement. Like, the insurance company may have charged you a higher premium.

Suppose you concealed some vital information related to your health. So, you lied about your lifestyle. On discovering such information, the insurance company will deny the claim made by your beneficiary.

 

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Illegal activities

If your death results from involvement in criminal activity, the insurance company can deny you the death benefits. Suppose you get killed during a robbery; the insurance company can refuse payment to your beneficiary.

Dangerous hobbies

An insurance company will not want you to endanger your life. An insurance company may insert a clause in the agreement preventing your participation in life-threatening hobbies. If you violate this clause, it can void your insurance policy.

If you want your beneficiary to get the death benefits, stay away from hobbies like skydiving.

Death cases not covered by life insurance

Death in some circumstances can void a life insurance policy. Under the following situations, an insurance company does not award the death benefits:

Death from alcohol

Generally, insurance companies do not grant policies to those with a drinking habit. But it doesn’t mean that you should trick the insurance company by providing wrong information. If the policyholder dies while driving under the influence of alcohol, the insurance company may reject the beneficiary’s claim.

 

In 2020, 74,408 Americans ages 16 to 64 died of alcohol-related causes, while 74,075 individuals under 65 died of Covid-19.

 

Death from smoking

Smoking is highly detrimental to your health. It leads to complications that can cause your death. If you conceal your smoking habit from the insurance company, it will not help your dependants. The insurance company may withhold death benefits on discovering the truth.

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