We’ve all heard the rumors, we’ve all read online horror stories, we’ve all held that fear somewhere inside us and wondered: What if, for one reason or another, my life insurance policy doesn’t pay out?
First, let us stop you right there. That hardly ever happens.
Your insurer will almost certainly meet its obligations. In addition, we would hope your policy is issued and backed by an insurer with a long and reliable track record.
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 on your application
If we’ve said it once, we’ve said it a thousand times: Be honest and transparent when applying for life insurance. Not only does this ensure that you get the most accurate possible rate, it also helps guarantee that your loved ones have a secure safety net in the event of the unexpected. If you omit or mispresent information in your application, that could impact whether your beneficiaries are entitled to your policy’s death benefit.
This is particularly true when it comes to illnesses, or high-risk habits (such as smoking) that might cause illness. For example, most insurers wouldn’t pay out if you died of undisclosed cancer that was diagnosed before the policy was issued, or if you died while participating in an undisclosed risky hobby (say, regularly skydiving) that you had been participating in before the policy was issued. If this turns out to be the case, the premiums you paid would be returned—effectively rendering the situation as if you never got insured in the first place.
In the event of suicide within the first two years of your term
If an insured commits suicide within the first two years after the policy is issued – also known as the contestability period – an insurer will likely not pay the death benefit as many policies contain a suicide exclusion. (And while we’re on the topic, suffice to say that we would urge you to find counseling and resolve the situation another way if this is something you’ve been thinking about. Start by going to suicidepreventionlifeline.org.)
A contestability period is something designed by the industry to protect insurers from being defrauded. Typically, unless there’s a reason to suspect fraud, claims are usually not contested after this period, when the larger burden of proof shifts to the insurer rather than the insured.
Keep in mind that if your policy were to lapse at some point during your term, it is possible that the contestability period would restart.
Death during an act of war… Or while in outer space
Looks like we’re down to the “very unlikely scenarios” portion 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 some reason, people ask about this. Not a lot, but more than you would’ve ever expected in a million years. For now, the Haven Term policy does not mention space specifically, but between SpaceX and the supposed space force, maybe it could one day in the future. Until then, it will remain in the final frontier… for the insurance industry.
Although we’ve identified several scenarios, it’s always a good idea to review your policy carefully to see if there are other types of exclusions that could impact the payment of a claim. Call customer support. Print out your policy documents to read at the beach (okay, maybe not this one). But just make sure you’re in the know when it comes to your life insurance.
Louis Wilson is a freelance writer whose work has appeared in a wide array of publications, both online and in print. He often writes about travel, sports, popular culture, men’s fashion and grooming, and more. He lives in Austin, Texas, where he has developed an unbridled passion for breakfast tacos, with his wife and two children.