In More About Term Life Insurance

Purchasing a new life insurance policy brings peace of mind that your family’s future will be financially secure in the case of your sudden passing.


After all, the primary role life insurance plays in your overall financial plan is to replace your income if you pass away.


Have you ever thought about things that could void the death claim payment of your policy?  While this is not intended to be an all encompassing list, here are a few things which may very well cause the life insurance policy you acquired to not pay the claim in the event of your passing.  Most are easily avoidable, others may not seem so obvious. When purchasing term life insurance, it’s vital to be as educated as possible, and the team at Low Cost Life Insurance work directly with you to understand every piece of your policy.  


Withholding Information


This may seem obvious, but it bears repeating. The insurance company investigates the cause of death when a claim arises within the first 2 years of the issue date. This is known as the contestability period.


During this period, the insurer will look at the events that lead to the death in question and compare them to information provided in the original application. Failure to be forthright with a health condition, for example, may deny payment on the claim.


Each state handles this a bit differently, as they each have their own set of laws around the incontestability clause. In most states, a policy can be voided even if the misrepresentation has no connection to the cause of death, so being forthright about every detail is paramount to your policy. 




Life insurance is a type of contract. Any knowingly committed act of fraud could void the agreement.


Two years after the aforementioned contestability period, for any claim to not payout, the insurer must prove fraud.


Similar to withholding information, if you knowingly provide material misinterpretations, you may also be guilty of insurance fraud. Not only could this void your contract, but you may also face criminal charges.  


Insurable Interest Must Exist at Time of Contract


Insurable interest means you will face a financial loss as a result of the insured’s death.  The beneficiary and owner of a life insurance policy on your life must be able to prove and demonstrate an insurable interest. In most cases, these are blood or law related individuals. For example, your spouse and children would have an insurable interest in a life insurance policy on your life.  


Another example would be your business partner. If a policy lacks an insurable interest at inception, it will not be issued by the insurer. Again, any fraudulent or misrepresentation of your insurable interest with the insured could impact the paying of this claim as a result of the death of the insured which is why it is so important to be honest and transparent with all the information provided to the life insurance carrier. 


Case of Suicide


Depending on your state of residence, there may be a suicide clause in your policy. While this is a common circumstance of policies potentially not paying out, this is often an overlooked clause by most clients seeking an insurance policy. 


The reason this clause is enacted in these states is to protect insurance companies from individuals who attempt to take out a large policy, full-well knowing their contemplation of suicide, which they hope to flip into a “betterment” of their family’s financial situation. 


We Provide Transparency In Our Policies


Low Cost Life Insurance has built a reputation of integrity and transparency with our clients. We provide the facts and clear education for you to best understand the benefits of term life insurance. 


It’s always been about helping people make the best decisions for their family’s future. No matter the needs, the team at Low Cost Life Insurance is here every step of the way, providing clear explanations, confidential conversations, and personalized evaluations of your coverage needs. 


Get in touch today or give us a call at 1-877-794-TERM (8376) 

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