What kinds of deaths are not covered by term life insurance?

Life insurance provides vital financial protection to your loved ones if you die. But how you die matters when it comes to your coverage and if your life insurance policy pays out.

Term life insurance is the most affordable type of life insurance that lasts for a specific number of years (the term) before it expires. If you die during the term, your life insurance company pays out a death benefit to your designated beneficiary.

But there are extenuating circumstances, such as lying on your application or having a specific exclusion on your policy, that could prevent a payout. Read on to learn more about the types of deaths in which term life insurance won’t pay out the death benefit to your beneficiaries—and how you can make sure your loved ones receive the full coverage you paid for.

Reasons life insurance won't pay out

If you pay your premiums on time and die while your policy is active, your life insurance beneficiary will receive a payout from your insurer. But, there are some situations when the life insurance company may withhold a death benefit:

Lying

If you commit life insurance fraud on your insurance application and lie about any risky hobbies, medical conditions, travel plans, or your family health history, your insurance company can refuse to pay out the life insurance death benefit to your beneficiaries when you die. Being as honest and thorough as possible during the underwriting process is the best way to ensure that there are no surprises later.

Risky hobbies

If you die participating in a dangerous activity you regularly enjoy (flying a private plane, bungee jumping, or scuba diving) whether or not your insurer pays out depends on your individual circumstances and the details of your policy.

More often than not your beneficiaries will still get the life insurance payout, but if your lifestyle poses enough of a risk, your insurer may add a life insurance exclusion to your policy prohibiting payment distribution if you die doing said risky activity. Some pilots, for example, have to opt-in for an aviation exclusion rider to get life insurance coverage. If they die in a flying accident, their beneficiaries won’t get the death benefit.

And if you didn’t inform your life insurance company about your favorite pastimes during the application process (re: lying), they can refuse to pay your beneficiaries when you die or cancel your coverage altogether. Even if being honest means you end up paying higher premiums or there are exclusions in your policy, it’s important to be completely honest on your life insurance application. Not doing so can jeopardize your beneficiary’s ability to collect the death benefit.

Murder

If your beneficiary murders you, your murderer won’t get the death benefit due to “the slayer rule.” The slayer statute prevents a death benefit payout to anyone who murdered — or is closely tied to the murder — of the insured. In such a situation, the insurance company will instead distribute the death benefit to your contingent beneficiaries or your estate.

Suicide

Suicide is typically covered under life insurance, with one major caveat: most life insurance policies have a “suicide clause,” during the first two years of the policy (a.k.a. the contestability period we mentioned earlier). Life insurance does not cover suicide if your death is within this period.

Insurance companies have suicide clauses in place so that applicants cannot take their own lives immediately after their life insurance policy goes in force. This gets complicated in certain scenarios, such as a drug overdose. Life insurance companies can deny coverage in the case of a drug overdose, but they’ll need to prove that the overdose was deliberate to refuse the death benefit payout.

What happens to a life insurance policy with no beneficiary?

There are two additional scenarios where the death benefit payout can get tricky: if you don’t list any beneficiaries in your life insurance policy or if your beneficiaries predecease you.

If you don’t choose any primary or contingent beneficiaries:

If you don’t list any beneficiaries in your policy, the benefit goes to your estate instead, making it difficult for your children or other dependents to receive payments.

Not selecting beneficiaries can significantly slow down the disbursement of life insurance benefits because the payout is then subject to probate, where the courts determine who should get your assets. Your intended beneficiaries may also have to pay estate taxes on the life insurance benefit if it goes to your estate.

If your beneficiaries predecease you:

If your beneficiaries die before you, the same obstacles will apply as if you didn’t select beneficiaries at all — your life insurance benefit will be paid out to your estate and your loved ones won’t receive any money.

You can make sure that your family is financially protected by updating your policy’s beneficiaries with every big life event — such as a death in the family or the birth of a child.

When won’t the insurer pay out to your beneficiary?

Any living person or active entity you list as your beneficiary is eligible to receive life insurance if you die for any reason we didn’t include above. This includes people who are incarcerated or unemployed, nonprofit organizations, and charities. As long as your beneficiaries have a bank routing number or mailing address to receive paper checks (so, no pets, sorry), you can rest assured they will be taken care of when you’re gone.

To ensure your beneficiaries don’t face unforeseen difficulties when claiming their payout, include as much information about them as possible when you first name them as a beneficiary, including their social security number, full name, relationship to you, and how the death benefit should be dispersed to them.

What does life insurance cover?

Life insurance policies cover almost all deaths due to an illness, accident, or natural causes. As long as you avoid the exceptions we detailed above, your beneficiaries will get the life insurance payout when you die. Here’s an overview of what is covered under term life insurance:

Natural causes

Your beneficiaries will receive the death benefit if you die of a heart attack, infection, kidney failure, stroke, old age, cancer, or any other natural cause.

Accidental death

Life insurance covers accidental deaths. If you die from an accidental drug overdose, motor vehicle accident, poisoning, drowning or another tragedy, your beneficiaries will receive the death benefit.

Suicide, if it happens outside the contestability period

If the two-year contestability period has passed and you die from suicide, your life insurance policy will pay out full death benefits to your beneficiaries.

Murder

If you are murdered and your beneficiaries weren’t involved, the death benefit will be paid out to them. The same is true regardless of how you were killed and if your death is ruled manslaughter or homicide.

Pandemic-related illness

If you already have an active policy in place and die of a pandemic-related illness such as coronavirus, it’s categorized as a natural cause and your family will still receive the death benefit. However, if you get a new life insurance policy during an ongoing pandemic and lie on your application about previous or future travel plans, your health, or any exposure to the pandemic, your insurer can refuse to distribute the death benefit.

If you are honest on your application and pay your premiums on time, you can rest assured that your beneficiaries will be covered when you die. If you have specific questions, be sure to ask your broker during the application process to avoid any issues.