What Does Life Insurance Cover And Exclude?

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How Much Life Insurance Do You Need? – Forbes Advisor

Life insurance covers death from illness, accidents and simply old age. This includes deaths from diseases, falls, car accidents and Covid. Deaths from accidental drug overdoses are covered.

A narrow type of life insurance called accidental death and dismemberment covers only deaths that are accidental, such as an accidental fall or car crash. It does not cover deaths by illness, disease or old age.

Life insurance policies generally exclude only suicide within the first two years of owning the policy. This “suicide clause,” as it’s called, is a standard part of life insurance contracts. Apart from that, you can count on a life insurance policy to provide a payout no matter the cause of death.

There are cases where a payout could be jeopardized for reasons unrelated to the cause of death. For example, if the policyholder quit paying for the life insurance and the policy lapsed, there is no payout. However, if the policyholder only recently quit paying because of an illness—such as a hospitalization that prevented payments—beneficiaries might be able to reinstate the policy by paying the premiums due.

Life insurers could also deny a payout if they find that the applicant misrepresented something on the application, such as a health issue.

 

source: Forbes Advisor.com

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