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What does life insurance cover?


Life insurance pays out a death benefit, which covers most expenses, with a few exceptions.

Amanda Shih author photoRebecca Shoenthal author photo


Amanda Shih


Rebecca Shoenthal

Updated February 24, 2021|2 min read

Editorial disclosure

Life insurance companies pay out a death benefit to provide financial protection to your named beneficiary in cases of natural death, accidental death, suicide, or murder. In rare circumstances involving fraud or crime, your policy will not pay out.

Your beneficiaries can use the death benefit on any of their expenses, like a mortgage, college savings, or funeral expenses.

Key takeaways

  • Life insurance pays out for death by natural causes, accident, suicide, and homicide

  • There are no restrictions to how or when beneficiaries spend the death benefit

  • In cases of fraud or criminal activity, the benefit may be withheld

What does life insurance cover?

What life insurance covers falls into two separate categories: the expenses the policy’s death benefit can be used on and the causes of death insured in your life insurance contract.

What expenses are covered by life insurance?

Your beneficiaries can spend your policy’s death benefit however they want. Beneficiaries often use the financial support for:

  • Everyday expenses: Like monthly bills, groceries, and other household essentials

  • Outstanding debts: Including a mortgage, credit card debt, private student loans, or auto loans 

  • Child or dependent care: Replacing care provided by one spouse or programs like daycare 

  • End-of-life expenses: Such as the cost of burial and funeral expenses or end-of-life medical care

  • College costs: To fund continuing education for your spouse or tuition for your children

When you shop for a policy, make sure that you buy enough coverage to account for your current and future expenses.

→ Learn more about how to spend life insurance proceeds

What types of death are covered by life insurance?

Standard life insurance policies cover almost all deaths, with a few potential exceptions. As long as your policy is still active at the time of your death, life insurance providers will pay out death claims due to:

  • Natural causes: For example, a heart attack, old age, or illnesses like cancer

  • Accidental death: Including accidental drug overdose

  • Suicide: After the policy’s suicide clause period ends

  • Homicide: Unless the beneficiary played a role in the murder

In some cases of severe illness you can access a portion of your life insurance funds before you die with policy add-ons called riders. You’ll need to have a qualifying condition, such as a terminal illness or a disability.

What is not covered by life insurance?

In cases of an expired policy, fraud, criminal activity, or certain other exclusions, your beneficiaries may not receive the death benefit.

  • Expired policies: Policies only stay active as long as you pay your premiums (and as long as your policy’s term). If your policy expires or lapses, your beneficiaries lose out on the death benefit.

  • Fraud: If you lie on your life insurance application, your provider can cancel your policy while you’re alive or deny or reduce the death claim after you pass away.

  • Criminal activity: If you die while committing a crime (or your beneficiary committed a crime to access your insurance money), your provider won’t pay out.

  • Exclusions: If you have a hazardous hobby, like skydiving, your provider may exclude it from your coverage, meaning the policy would not pay out if your death was skydiving-related.

→ Learn more about when life insurance doesn’t pay out

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How quickly does a life insurance policy pay out?

Beneficiaries must file a claim with the insurance company to receive the death benefit. Providers usually take a couple of weeks to process and pay out a claim. Your beneficiaries can choose to receive the payout as a lump sum or in monthly or annual installments.

The death benefit payout could be delayed if you die within the first two years of the policy (the contestability period). During this time your provider may review your application for misrepresentations before approving the claim. A review could delay payment up to 60 days.

Your state insurance department may also have a "timely payment of claims" clause that requires providers to pay out within a set period.

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Buying life insurance protects your loved ones from the worst-case scenario. As long as you’re honest on your application your policy will cover almost any cause of death, leaving your family with financial assistance for any of their present and future needs.

What does life insurance cover? FAQ:

When does life insurance pay out?

Life insurance pays out the death benefit to your beneficiaries for most causes of death. Illness, suicide, accidents, and death by natural causes are all covered by life insurance.

What is not covered by life insurance?

If you lied on your life insurance application, are murdered by your beneficiary, or die doing something that is excluded by your policy, your provider will not pay out.

What are common exclusions to a life insurance policy?

Many insurers have exclusions for deaths that occur while committing a crime or during a dangerous activity, such as skydiving.

What can the life insurance payout be used for?

Beneficiaries can use life insurance funds any way they see fit. Many use the proceeds to pay off debts, cover funeral expenses, or for everyday expenses.