Life insurance gives you peace of mind knowing that your family will be financially secure when you die. The policy pays a lump-sum death benefit to your beneficiaries.
Your loved ones are free to use this money for whatever: cover your final expenses, put food on their table, pay for everyday living expenses, and plan for their future.
So if you are wondering, ‘Does life insurance cover natural death?’ Let’s get right into the types of death covered and not covered by your life insurance policy.
The circumstances around your death and the actual cause of death can sometimes invalidate your insurance policy.
There are some circumstances under which your life insurance policy benefits are not payable, and there are things they do not cover.
Does Life Insurance Cover Natural Death?
Yes. If you die from natural causes, like stroke, cancer, old age, etc., your life insurance policy will pay out, and your family will receive your full death benefit.
As long as your insurance policy is up to date, the insurance company will process your death benefit claim without obstacles.
Also, life insurance policies cover death from COVID-19.
What Other Types Of Death Does Life Insurance Cover?
- Accident: Suppose you die from a motor vehicle accident, plane crash, drowning, or other accidental tragedy. In that case, your beneficiaries will receive your death benefit payout from your insurance policy.
- Homicide: If you are murdered, your beneficiaries will receive the death benefit payout. However, if your beneficiary murders you, your insurer will withhold your payout.
- Pandemic illnesses: If you die of COVID-109 while your coverage is in force, it is categorized as natural death, and your insurer will pay out the death benefit to your beneficiaries.
What Types Of Death Does Life Insurance Not Cover?
While a life insurance policy covers death from natural causes, accidents, and homicide, other certain circumstances could prevent a payout. These are typically called exclusions.
If you don’t die due to one of the natural causes, some insurance companies in Canada may not pay the death benefits to your family.
Some standard exclusions are:
- Murder: According to the Slayer Rule, if it is discovered after an investigation that your beneficiary murdered you or is somehow tied to your murder, your beneficiary will not receive your death benefit. Instead, the insurance company might pay the benefit to your estate.
- Suicide: Generally, life insurance covers death by suicide. However, there is a “suicide clause” in most insurance policies. This is a contestability period, usually the first two years of the policy. Insurance companies, won’t pay out your death benefit if you commit suicide during this period.
- Risky Activities: Depending on your insurance policy, some companies may not cover you if you die while participating in any risky activity. Risky activities include Scuba diving, parachuting, auto racing, hand gliding, rock and mountain climbing, base jumping, etc.
- Hazardous jobs: Hazardous jobs include offshore fisherman, pilot, logger, offshore oil rigger, etc. If you participate in these activities, you might have to pay higher premiums to get death benefits. Your insurer might also add an exclusion to the policy that prohibits payout if you die while engaged in any risky activity, depending on how risky the activity is.
Other Reasons Life Insurance Won’t Pay Out
Also, there are some rare situations that can hinder an insurance company from paying your death benefit on a life insurance policy.
- Illegal activities or reckless endangerment: If you die while driving recklessly under the influence or while committing a crime, life insurance companies will not make the death benefit payment to your beneficiaries.
- Lying on your application (Insurance fraud): Your life insurance death benefit can be withheld if you lie on your application. Your insurer can cancel your policy if they discover you lied about your travel plans, medical conditions, family health history, alcohol, and drug abuse, or risky activities.
What Happens To Your Life Insurance Policy If You Have No Beneficiary?
If you do not list any primary or contingent beneficiaries, or your beneficiaries predecease you, the death benefit payout gets complicated.
In this case, the death benefit goes to your estate, not your family or loved ones.
Without any beneficiaries, the death benefit goes through probate, a lengthy court process where the court decides who gets your assets. Also, your family would have to pay estate tax on your death benefit if it goes to your estate.
Final Thoughts on Does Life Insurance Cover Natural Death?
Generally, life insurance policies are meant to provide peace of mind for you and financial security for your loved ones.
Insurance policy will cover death due to natural causes but withhold death benefits in certain situations.
Ensure you go through the policy’s fine print and understand what it covers and what it does not cover.
FAQs on Does Life Insurance Cover Natural Death?
What happens if you die a month after getting life insurance?
If you die a moth after getting life insurance, the insurance company can contest or deny your beneficiary’s claim. however, they can contact an experienced insurance professional for advice or seek counsel with an insurance lawyer.
Do you get life insurance if you die of old age?
As mentioned above, your insurance policy will pay out your policy’s death benefit to your beneficiary if you die of natural cause, which includes old age.
Hi, I'm Adeola Adegoke. I am a licensed Insurance Broker in Manitoba, and I hold a master’s degree in Mathematical Sciences (with a major in Financial Modeling) from the African Institute for Mathematical Sciences (AIMS), Tanzania.
Also, I have a second master's degree in Statistics from the University of Regina, and I am currently pursuing my Ph.D. in Statistics at the University of Manitoba.
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