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Life insurance policies have limits depending on cause of death p2

Wed Aug 27th, 2014 on     Insurance Claims,    

For some reason, when we think about reading the fine print of an insurance policy, a Peanuts strip about Linus reading “The Brothers Karamazov” comes to mind. Lucy asks him if he finds the Russian names to be difficult. “No, when I come to one I can’t pronounce,” Linus replies, “I just bleep right over it.”

There are times in life when you come across something you don’t understand, and you have a choice: Look it up now, or bleep right over it. It’s so tempting to do this with insurance policies, but it is a mistake. If you are having trouble understanding something in your policy, you should contact your agent or an insurance attorney.

We have been discussing life insurance policies, in particular, and two common provisions that address coverage when the insured commits suicide. The first, explained in our Aug. 22, 2014, post, is the suicide clause. 

The second is the “incontestability clause.” Under this provision, during the first two years of a policy, the insurance company may deny coverage if it discovers that the insured provided incorrect information on the application. After the two year coverage anniversary, though, the insurer cannot contest the claim.

All of this applies only in the absence of outright fraud. And, just as occurs with a suicide clause, the two-year contestable period starts over with each new policy.

There are plenty of examples of insurance companies denying claims when the insured has taken his own life — or when the insurance company suspects that the insured’s death was not suicide. In some ways, a claim denial is easier to deal with. Insurance companies may put a claim on hold pending investigation. In those cases, not only is the family forced to revisit all the events leading up to their loved one’s death, but they may have trouble making ends meet.

Remember, it is not morbid to ghoulish to read through your life insurance policy (without bleeping over the complicated parts). You need to understand what is covered and what may limit or bar coverage, if only to make sure the policy is the right one for your situation.

Source:, “How Life Insurance Policies Deal with Suicide,” John Dorfman, Aug. 15, 2014

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