The concept of life insurance is straight-forward. As a life insurance policyholder, you pay a certain premium each month and when you pass away your family receives the death benefit. However, it is not always clear whether all causes of death are covered. Dangerous activities like skydiving are not covered by life insurance. What happens if the policyholder is murdered? This adds a degree of complexity to the settlement process, especially if there’s an ongoing police investigation. This guide will cover the links between life insurance and murder.
So, does life insurance cover murder? Yes, life insurance covers murder and the beneficiaries can claim benefits in the event the policyholders are murdered. However, the circumstances surrounding the death have to be examined and the insurance company has to determine the policyholder was not involved in criminal activity. Each murder case is judged on an individual basis and there are few exceptions where an insurance company won’t pay for a life insurance claim in the event of murder.
Murder and Insurance Fraud
The most common reason insurance companies refuse to pay out on murder claims is a fraud. Many murders were carried out to perform insurance fraud. The insurance company will collaborate with the police to determine that the murder was not intentional and that there was no misleading information provided by both the policyholder and the beneficiaries filing the claim.
If the beneficiary was involved in the murder, the claim will be rejected. If there are certain inconsistencies in the police investigation that indicate the policyholder has given false information to the insurance company, they can also refuse to pay out on the claim. In some instances, insurance companies cancel life insurance while the policyholder survives a murder attempt and they discover fraud.
Life Insurance Policies & Murder: What Is Covered
The average policyholder pays into life insurance for over 5 years. This is why it’s frustrating if their beneficiaries are not able to receive a payout upon their death. Insurance companies make this harder by analyzing the circumstances surrounding the death to determine if the person was involved in a crime or drinking and driving.
Even suicide is not covered by life insurance. If you’re considering purchasing a life insurance policy, look for a policy that will cover accidental death and death caused by health-related issues. This will give you the most coverage, and it will include suicide after the first two years of coverage.
Life insurance policies vary greatly and you must look into the individual fine print of the policy you’re taking out before you decide which policy is right for you. The main thing to keep in mind is that life insurance policies have a 2-year window called the “contestability period”. During this period, the beneficiaries will not likely be entitled to a payout until the insurance company can determine the exact cause of death.
They make inquire as to past medical records, toxicology reports, and autopsies. In regards to coverage, if a certain cause of death is not covered in the insurance policy you can purchase it as an add-on for an extra cost. Example: If you do extreme sports, drive a motorcycle, or do skydiving, you can add accident insurance to your life insurance policy. This will cover you for all possible accidents. Do not be afraid to consult your insurance company about how murder or other causes of death are handled. They will reveal critical information that is important to your beneficiaries.
What If Insurance Refuses to Pay Out for Murder?
The insurance company can refuse to pay out for murder depending on the circumstances surrounding the death. If there is a police investigation and the beneficiary (spouse, children, parents, etc) are a suspect in the police investigation, the insurance company will refuse to pay the death benefit. The insurance company can even go as far as to sue the beneficiary if they aren’t found guilty in the murder charge, as long as they have evidence that links them to the murder. These cases tend to be filed in a civil court rather than criminal court where it’s harder to find someone guilty for murder, as they require ample evidence.
Other causes of death that may not qualify for a life insurance payout are linked to dangerous activities. For instance, if the policyholder was under the influence and they died in a car accident, the insurance company will refuse to pay their life insurance. If they are murdered while conducting illegal activities such as dealing drugs, robbing people, trespassing illegally, or involved in gang activity, it is highly unlikely the insurance company will pay for the claim.
There are certain loopholes the insurance companies exploit to not pay on life insurance claims if the person changes their geographic location such as moving to the country or outside the United States. They are also entitled to carry out their own investigation and determine if there was a fraud. Depending on the outcome of the investigation, they can determine whether they’ll pay the beneficiaries.
Pro Tip: Always be transparent with the insurance company when you take out a life insurance policy. Honesty is key to passing all insurance investigations, and this will ensure your loved ones are taken care of.
Does Suicide Qualify as Murder?
The way suicide is treated depends on the life insurance. Some life insurance will not consider suicide as murder and will refuse to pay out on the claim. However, other forms of life insurance will include suicide as murder and will payout on life insurance. Depending on the state you reside in, you could have a suicide clause on the policy. Even if you have a clause of this kind on your policy and you commit suicide within a certain time period, the beneficiaries would only get the premiums back without the death benefit.
Television leads to misconceptions about suicide and life insurance and people falsely believe that their beneficiaries will be left with a large insurance settlement if they commit suicide. However, most life insurance policies are canceled after suicide. The only exception is if the suicide occurs after the contestability period, which means the policyholder has to have held the policy for 2 years and onward.