What types of death are covered by life insurance?

Death is a topic that most people would rather avoid discussing. However, it's an inevitable part of life, making it essential to plan for. One way to do so is by purchasing life insurance. However, not everyone knows exactly what types of death are covered by a policy.

In this article, we'll go over the different types of death that are typically covered by life insurance, so you'll have a better idea of what kind of protection your policy can provide for your dependants in the event of your passing.

Types of death NOT covered by life insurance

One of the most common reasons insurers refuse a payout is if an individual deliberately lies or withholds information on their application. Therefore, you should be honest when applying for life insurance and disclose any pre-existing conditions.

Some other examples can include:

• Suicide within a waiting period: Many life insurance policies include a suicide clause that limits or excludes coverage if the policyholder takes their own life within a specific period, often the first two years of the policy. After this period, coverage typically resumes and protects against suicide.

• Death during illegal activities: If a policyholder dies while engaging in illegal activities, such as drug trafficking or committing a crime, insurers may deny a payout, as the death is considered preventable and related to unlawful behaviour.

• Self-inflicted injuries: Similar to suicide, if the death results from intentional self-harm, insurers may reject claims, depending on the policy's terms. This includes acts such as reckless driving or intentionally causing harm.

• Death resulting from high-risk activities: Many life insurance policies exclude cover for deaths resulting from participating in high-risk activities, or extreme sports, unless the policyholder has specifically included cover for these events.

• Death due to substance abuse: If there is evidence that the policyholder died as a direct result of substance abuse, including alcohol or illegal drugs, the insurer may refuse the claim.

Lots of insurers, however, have 90%+ successful claim rates for life insurance, so as long as you are open and honest during your application, a payout shouldn’t be an issue. 

You may be interested in the following: Does life insurance actually pay out?

Does life insurance cover suicide?

Life insurance policies have a suicide clause - although it depends on the type of policy and the insurer. Suicide may be covered if it occurs within a certain amount of time after the purchase (for example, one year).

Does life insurance cover death overseas?

In most cases, life insurance does cover deaths even if they occur outside of the UK. As long as you have proof of death in the form of a death certificate, the insurer should process the claim regardless of the location.

However, some insurers may deny a claim if there are restrictions in place. For example, if the death occurred in a country that the insurer has deemed high-risk, or if the policyholder violated travel advice (such as travelling to a war zone), the insurance claim may be denied.

Please note: The insurance products offered by Cavendish Online have no cash-in value at any time. If you stop paying your premiums your cover will stop, your policy will end, and you will receive no benefit. If you have not claimed before the end of your chosen policy term, the policy will end, and no benefit will be paid.

If you are facing financial difficulty, please contact your insurer before cancelling your policy or letting it lapse. They may have options available that means you don't have to lose the plan.

How do life insurance payouts work?

A payout, also known as death benefits, is paid out to the family and/or loved ones when the policyholder passes away during their policy. Depending on the policy type, the payout can be a lump sum or a series of payments made over time.

Life insurance payouts depend on several factors. For example, term life insurance only pays out so long as you pass away within the agreed policy term. Whereas whole life insurance can cover you for the rest of your life before paying out.

Please note: The insurance products offered by Cavendish Online have no cash-in value at any time. If you stop paying your premiums your cover will stop, your policy will end, and you will receive no benefit. If you have not claimed before the end of your chosen policy term, the policy will end, and no benefit will be paid.

If you are facing financial difficulty, please contact your insurer before cancelling your policy or letting it lapse. They may have options available that means you don't have to lose the plan.

Which type of policy should I buy?

There are a few different types of life insurance policies available. The type of policy you should buy will depend on your personal needs and circumstances.

For example, if you need cover for a set period of time or if you want the lowest possible costs, then term cover may be a good option for you.

On the other hand, if you want permanent cover then whole life insurance (also known as 'life assurance') may be the better choice. You can also opt for a joint life policy if you and your partner are looking for cover together.

See: What is the best life insurance policy for me?

Do I need to undergo a medical exam to get life insurance?

In general, insurers may require medical exams for policies with larger cover amounts. This is because the insurer wants to assess your risk profile before granting you cover.

The exam will involve basic tests such as checking your height, weight, blood pressure, and cholesterol levels via a nurse screening. Your nurse may also ask questions about your lifestyle habits (such as drinking or smoking) and family medical history.

The results of the exam can be used to determine whether or not you qualify and what rate you can expect to receive.

If you have any pre-existing medical conditions, guaranteed life insurance may be a good choice. This type of cover provides guaranteed acceptance without the need for a medical exam. However, it is usually more expensive than traditional life insurance policies, and the sum you can insure may be more limited.

How long does it take to receive a payout?

The time it takes for a family/beneficiary to receive the death benefit depends on several factors. Generally speaking, it can take anywhere from a few days to a month for the beneficiary to receive the payment.

The time frame can depend on things, like the size of the claim, how quickly and accurately paperwork is completed, and if any additional verification is needed.

If you are still unsure about your policy and what types of death it covers, you can contact our life insurance advisers. They can help provide more information on what is covered, as well as answer any additional questions you may have.