A life insurance policy sometimes covers accidental death because life insurance policies vary depending upon the provider. Before applying, you should know what your insurance provider offers under life insurance. Some standard exclusion that could apply to accidental death coverage includes suicide, intentional acts, and accidents involving animals.
A life insurance policy provides a death benefit to the beneficiaries in return for recurring premium payments. The final payout (death benefit) may cover expenses such as the family's mortgage, and children's college tuition or replace lost income.
Term Life Insurance vs. Whole Life Insurance Two standard life insurance policies are:
Term Life Insurance Policy: It typically has a shorter duration (say 5 to 30 years) than a whole-life policy.
Whole Life Policy: It can provide lifetime protection and may be a better option if you are planning to retire or want to leave your money to your heirs.
Your chosen beneficiaries will generally receive the life insurance payout if you pass away from natural causes, a disease, or an accident during the policy period. Here are the death types that a life insurance plan covers:
Your beneficiaries will receive the insurance payout if you pass away due to a heart attack, cancer, infection, kidney failure, stroke, old age, or any other natural cause.
If you pass away in a car accident by drowning, being poisoned, accidentally taking too much medication, or any other calamity, your life insurance policy will provide death payments to your beneficiaries.
Your insurer could decide not to pay the death benefit to your beneficiaries if you pass away for a cause other than one of those listed above.
The following scenarios could prevent your beneficiaries from receiving benefits:
You could not be covered if you pass away while taking part in a risky activity, depending on the circumstances and your insurance coverage, including:
A hang glider
Mountain and rock climbing
Some other professionals, such as loggers, pilots, offshore oil rig workers, fishermen, and underground miners, are also considered risky.
According to the "Slayer Rule," your beneficiary will not be entitled to the death benefit if they murder you or are involved in your murder.
Suicide is generally covered by life insurance. However, the first two years of most policies are a "suicide clause" or contestability period. During this time, suicides are excluded by life insurance policies.
Things could get complicated if a policyholder overdose on drugs and dies during this period. In this instance, the insurer must demonstrate that the overdose was deliberate to deny the death benefit.
Life insurance can offer your loved ones financial security and peace of mind. Though it typically includes coverage for natural causes, disease, and accidents, Insurers may refuse payouts in some circumstances. So, it is essential to read the policy carefully to understand what is covered and what is not.