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Causes of Death and Term Life Insurance

term life insurance thumbnail imageThere are many reasons to buy life insurance, but most people make the investment to make sure their loved ones are taken care of in the midst of tragedy. Though few want to consider an untimely death, these delicate issues need to be tackled while someone is buying term life insurance.

Many term life insurance policies have special provisions in place for deaths not caused by medical complications or natural causes. Those who enter into these contracts need to be aware of what situations could keep their family from collecting benefits and what riders could offer them more protection.

  • Suicide Provisions

Suicide is a sad and terrible event for any family. The pain of the loss is amplified by the many questions the act raises. In this time of sorrow, many families may need the help a life insurance plan can provide.

Most companies write suicide clauses into plan contracts. Generally, this rider states that the plan must have been active for two years prior to the date of death in order for the beneficiaries to collect benefits. If that amount of time has not passed, the policy is voided and the money is usually forfeited.

  • Foul Play

Many insurance contracts also reserve the right to withhold claims because of foul play. If the death of the insured was suspect, the insurance company may wait to fulfill the terms of the policy until an investigation has been performed.

This may seem like something out of a movie, but sadly, murders for insurance money have occurred in real life. If there is any possibility that the beneficiary has played a role in the death of the policyholder, they can be denied their payout.

Insurers use the evidence of police and governmental investigations and their own researchers to make a decision on these claims. Some contracts even give the insurer the right of denial of claims if the beneficiary has not been charged with a crime.

  • Accidental Death Riders

Most term life insurance policies cover all types of accidental death, but some have extra accident riders. These clauses allow the applicant to request more death benefits go to the beneficiary if their death is the result of an accident. This may cause a rise in the cost of the premium, but not as much as raising the benefit for other causes of death.

The insurance company is responsible for determining whether the cause of death was in fact an accident. Some of the reasons for denying an accidental death claim should be listed in the contract under the rider or easily explainable by a company representative.

One can also purchase accidental death and dismemberment insurance privately or through work. It can work in conjunction with term life insurance to provide extra benefits to those who are in a dangerous line of work.

  • Making Claims

Fortunately, these extenuating circumstances are rare. Purchasing term life insurance is an excellent way to protect loved ones and only minimal attention needs to be given to these gruesome details. While it is important to understand these terms, planning benefits for loved ones deserves more attention.