Does life insurance pay out if there is a death within a year?
[social_share]Many life insurance policies have a condition that they do not pay out within a year of arranging the policy. The reason for this is to prevent the possibility of a person who has a terminal medical condition, or who intends to commit suicide, to take out the insurance with the knowledge that they are likely to die within a year.
Not all life insurance providers apply this clause, however, and many life insurance policies that do will only apply it to certain types of death. Accidental death, for example, often does not come under this sort of clause.
It can be a temptation to take out a large amount of life insurance with a provider if a person finds out that they have a terminal disease. People in such difficult circumstances can believe that they can increase the chance of their family inheriting a large amount of money. There can also be a temptation to apply for a life insurance policy without correctly completing a medical exam or a medical questionnaire. This is why the limited time clauses can be quite restrictive. If a medical questionnaire is filled out without the pertinent information regarding a diagnosis then the insurance policy may be deemed to be void.
Suicide can be a special case due to its voluntary nature. There are some life insurance policies that will never pay out in the case of a suicide or even in the case of death through recklessness. But some life insurance policies do pay out over an extended period of time.. It should be noted, however, that there have been cases where a life insurance investigator will not pay out even if there is a coroner’s enquiry that concludes that the death was not a suicide.
There are some life insurance policies that do not have these limits. Funeral insurance can often have no time restriction on pay outs, and this is also often the case with annual life insurance which is purchased via an employer. There are also a number of third party life insurance policies that do not have the time restrictions on life insurance pay outs, for example life insurance policies that are in place to secure a business loan, or insurance that is taken out on a new employee. A lot of these types of life insurance policies do stop the sudden increase in life insurance coverage as a compensatory measure.
