What does Life Insurance Cover?

The main exception to the general rule that life insurance covers all causes of death is suicide within the first two years of policy ownership. Aside from that exclusion, life insurance covers fatalities brought on by illness, disease, accidents, and homicide. If a life insurance company suspects fraud on the application, it may deny a claim regardless of the cause of death, especially if the death happens within the first few years of owning the policy. If someone lies on the application about their health or other details, the life insurance company may deny a claim from the beneficiaries. A life insurance claim might also be rejected in some exceedingly rare circumstances, such as when the insured person was killed by the beneficiary or when the claim is contested by someone who alleges that the policyholder was forced into changing the beneficiary.

A contract between an insurer and a policyholder is how life insurance is defined. In that agreement, the insurer ensures the policyholder’s financial security and provides a death benefit to the designated beneficiary in the event of the policyholder’s demise. The policyholder must either pay multiple payments over time or a single premium in order for the life insurance policy to remain in effect. According to the agreement, the insurance company will pay the individual or his family a lump sum amount after a specific period of time in the case of the policyholder’s death or if the policy matures. Life insurance is typically only offered for a short time. As a result, life insurance is required to pay a death benefit, also known as the sum assured, if the insurer passes away during this time. Depending on the type of life insurance, the insurer may receive a maturity benefit if they live past the term.