Life Insurance – The fine print

Reading the fine print on your life insurance policy is pretty important, since most companies will have situations where they won’t pay out in that area. Here are some examples of things to look for in the fine print of life insurance articles.

Contestable Period

This is a period of up to two years. During this time, the insurance company has the ability to decide not to pay based on some mistake made when you applied. This could be anything. If you didn’t tell them that you have high blood pressure or some other medical problem, then this could be a means for them to say they don’t have to pay. Obviously, this is what insurance companies do. They find as many ways to avoid paying as humanly possible. This is how they make money.

This is why it’s of critical importance to tell insurers absolutely everything. You should tell them any mental illness you’ve been diagnosed with, any preexisting condition, genetic issue from your parents, injury, anything. If you hold back any detail at all, it could be a problem when your beneficiaries come to collect on the insurance.

Suicide

One thing to look for in the fine print of life insurance contracts is what happens in the case of suicide. Many policies will not pay out in this case. This can differ based on what state you’re in. If this is in the fine print of your contact, then the beneficiaries of the life insurance would only get premiums back, they wouldn’t get the death benefit. This is often dependent on a particular time frame. This period of time is usually between one to two years.

The point of it is to prevent people from taking out large policies and then killing themselves in order to financially aid their friends and family. This might seem like something that people wouldn’t do, but you’d be surprised. This has to be claimed during the contestability period.

Acting Dangerously

The participation in dangerous activities could be a part of the fine print for life insurance contracts as well. Contracts may require you to divulge to them if you participate in dangerous activities like jumping out of planes or bungee jumping. This can cause your premiums to go up, and it can also be a problem when your heirs try to claim the money if you didn’t disclose your participation in such activities ahead of time.

Doing Something Illegal

If you’re engaged in committing a crime when you die, the company can refuse to pay. This can be anything. For example, if you’re engaged in a bank robbery and killed while trying to pull it off, then the life insurance company can say that they don’t have to pay. However, it doesn’t have to be something of that caliber. It can even be trespassing.

Maybe you were running away from an out of control car and ended up on someone else’s property. If the car hits you, or you have a cardiac event during this, then the insurance company can refuse to pay since you were engaged in a crime.

Lying About Your Age

This is often referred to as a “misstatement of age” clause. Even if it’s just a single day, you have to get your age right when making a contract. If you make a false statement about your age on purpose, saying that you’re either younger or older than you are than this could void the contract for life insurance. You have to make sure that you get this right, in other words.

Overall, reading the fine print is critically important when it comes to life insurance contracts otherwise you won’t know what it is that you’re agreeing to in the contract. You should be as cautious as possible.