<<em>strong>Life insurance is particularly important to anyone with dependents. Whether this means close family, a friend that you care for, or even your favourite pooch, life insurance can provide essential funds once you are gone. At a most basic level, life insurance policies can pay out an agreed sum on the event of your death. However, even this simple statement requires qualification, and so here we will look at some of the factors that can complicate the issue of life insurance.
Firstly, all life insurance policies, whether they are supplied by major providers like Santander, or the smallest of traditional brokers, will include a definition of a qualifying death in the policy. Put simply, not every method of shuffling off this mortal coil will be covered by the life insurance policy. Suicide is a perhaps obvious common exception, as is death by drug overdose. However, not all exceptions will be what you might think of as common sense. Every policy is a different legal document, so you cannot assume that, for example, death by all forms of accident is covered. One of the first things that you should do when checking out a life insurance policy is check the definition of qualifying death, especially if you enjoy extreme sports or pursuits.
The next point is just as important, and perhaps even more of a key issue than the definition of a qualifying death, although in many ways the two are linked. Non-disclosure of pertinent information when you take out the policy is a common pitfall that frequently voids life insurance policies, making them effectively worthless. Not admitting that you are a smoker is perhaps another example for the obvious category, but equally a large range of other underlying conditions can have the same effect when it comes time to claim on your life insurance. Some conditions you may not view as anything other than a minor irritation, like mild asthma, but you must make sure that you come clean when applying for your life insurance, if you want the contract to be honoured after you have gone. Just as with claims in pretty much every field of the insurance industry, investigation by the insurer is common before any pay-out is made. In the case of life insurance, the task of checking the facts is made particularly easy, thanks to the medical records and possibly autopsy that will swiftly disclose any issues that you perhaps tried to keep secret while alive.
The cheaper life insurance policies will also often have a limited shelf life, known as the term. Term life policies provide life insurance for a specified time, after which the contract is over. This means that you need to die within the term for your beneficiaries to receive any payout. While you’ll no doubt not be too disappointed to live to find the policy worthless, it is nonetheless something to consider when you weigh up the cost of the cheaper term life premium payments against the more expensive whole of life insurance option. Whole life insurance, of life assurance, is in fact the only form of life insurance policy that will pay out, whenever you check out.
