8 Things That Can Void Your Life Insurance

It is better to be aware so that you can avoid the risk of your life insurance policy or claim being rejected

While you may be paying high premiums on your life insurance policy, it alone is not enough to access the full benefits. When you take a life insurance policy, you automatically become liable to adhere to the terms and conditions. Due to lack of awareness, people sometimes take specific actions that may lead to the life insurance policy getting void or the claim being rejected. To avoid such eventualities, let us take a look at factors that can void your life insurance.

Suicide in first year – The life insurance claim will be rejected if the policyholder commits suicide within 12 months of taking the policy. Most insurance policies have this clause in the terms and conditions. In such cases, the beneficiary will only receive around 80% of the premiums paid and not the sum assured.

Alcohol or drug abuse – In case the death occurs due to substance abuse, drug overdose or excessive alcohol consumption, the life insurance claim can be rejected.

Involvement in criminal activity – It is possible that death can occur when the policyholder may be engaging in unlawful acts such as robbery, drug trafficking, etc. In such cases, the life insurance claim will be denied.

Participating in risky activities – Death caused due to high-risk activities such as mountaineering, skydiving, etc. may lead to the claim being rejected. If you participate in such activities, you need to inform the insurer before buying the policy. If you do such activities regularly, you can opt for additional coverage.

Fraud or misrepresentation – If you hide information from the insurer, it can lead to the claim being rejected. For example, a smoker may claim that he does not smoke. Or people in high-risk jobs such as mining may not reveal such information. In such cases, the life insurance claim could be rejected.

Hiding medical history – Many people try to hide pre-existing diseases, as it could result in a higher premium amount. However, hiding medical history can lead to claim rejection. If you have any pre-existing medical condition such as diabetes, cancer, heart disease, etc., you need to inform the insurer before taking the policy.

Policy exclusions – Most life insurance policies have certain exclusions such as death linked to terrorism, riots, war, etc. If death occurs due to any of these reasons, the claim could be rejected. That is why it is important to read the fine print. You can choose a life insurance policy that has fewer exclusions.

Unpaid premiums – This is quite obvious, but still many policyholders make this mistake. Most insurers provide a grace period of 15-30 days for missed insurance premiums. If death occurs after policy has lapsed, the life insurance claim will be rejected.