What's Not Covered in Life Insurance? Here's the List

We've heard from skeptics who think insurers will find a way to avoid paying a claim. So what does life insurance not cover? Let's talk about it.

Insurance companies have a bad rep. We think most of this stereotype comes from the health insurance sector. After all, how many times have you gotten a cavity filled or picked up a prescription only to find out that your insurance won’t cover all of it? Because of these experiences, you may believe that life insurance companies operate the same way.

But here’s why you don’t need to be skeptical about life insurance:

Life insurance protects your family against the risk of your death by providing financial protection in the case something happens to you, the policyholder. Life insurance companies would have a hard time fighting you on the legitimacy of your claim because unless you are an extremely skilled con artist, faking your death is hard to do!

However, in the spirit of being completely transparent, we want to give you all the facts so let's talk about what life insurance won't cover.

Life insurance policies come with something known as a contestability period. This means that if your insurer finds out that you misrepresented your health or risk of death by denying medical conditions or failing to include information about risk hobbies (that yearly mountain climbing trip up north!) in your application or during the underwriting process, your claim could be denied. (You can’t blame insurance companies for wanting to cover their butts.) Contestability periods exist essentially to reduce the risk of policyholders purposely to inflict injury for the purpose of collecting the death benefit payout.

This reasons is also why many policies typically include a suicide clause. A suicide clause states that a life insurance policy will not pay out in the first year of the cause of death is by self-inflicted injury or suicide.

For this reason, we recommend being as accurate as possible when completing your life insurance application. If you’re an occasional smoker, tell your insurance company. You’re much better off paying the higher premium and knowing your family will be covered rather than lying your way to a lower premium and running the risk that your family will lose their protection altogether.

Getting one policy and expecting it to apply for both you and your partner will result in you receiving coverage you may not have anticipated. Luckily, joint first to die policies can make that vision a reality.

Suicide isn’t fun to talk about, but it’s important to understand the implications of it when you buy life insurance. With suicide, there’s a risk of anti-selection. For example, someone may buy life insurance right before taking their own life to give their family a “payoff” after their death. Because of this risk, insurance companies usually exclude death benefit claims if the policyholder dies by suicide within the first two years of the policy.

Unfortunately, applicants who have attempted suicide or have had suicidal thoughts may get their claim denied. Insurers are less likely to cover these kinds of applicants because they are considered riskier.

Otherwise, life insurance has your back.

Beyond the two very specific circumstances we just discussed, you can sleep peacefully knowing that your life insurance company will protect you and your family. After all, life insurance companies have been in the business of offering protection for hundreds of years. If they were in the business of scamming people into thinking they were protected, someone would have gotten to the bottom of it by now. Canadian insurance rates in Canada are affordable and straightforward, making it easy to find a policy that fits within your budget showing life insurance is here to help.

It may be more difficult to get approved for life insurance if you have a sickness. For this reason, we recommend looking at CI as it protects those who have severe illnesses that find it hard to get coverage. This is one of many critical illness insurance benefits.

Even if you feel like it's too late, it isn't Life insurance has your back. Check out life insurance for seniors over 70 in Canada. Use our life insurance estimator to get the rates you require.

So here’s the takeaway: Tell your insurance company everything. It’s the best way to make sure there aren’t any holes in your family's financial safety net.

Curious what life insurance DOES cover? Find out here.

Want to get your application started today? Get cheap term life insurance in Canada through PolicyMe ‍