Life insurance pays for most causes of death, but not all. Common limits are suicide in the first two years, false answers on the application, a policy that lapsed and some risky activities.
Suicide clause: In North Carolina's rules, if the insured dies by suicide in the first two years, the payout is generally limited to the premiums paid. After two years it should not affect the benefit.
False answers: For the first two years, the insurer can contest the policy. If you left out or misstated something important, the insurer can cancel it and refund your premiums.
Missed payments: If you stop paying and the grace period ends, there is no coverage. State rules give at least a 31 day grace period.
Some deaths can lead to a denied claim. Examples are dying while committing a felony, or a death where drugs or alcohol played a part. Risky hobbies like skydiving may be left out or cost extra.
Unpaid policy loans are not paid to your family. The amount you owe plus interest comes out of the death benefit.
- Suicide in the first two years
- Lies or big mistakes on the application
- A lapsed policy
- Death during a felony
- Some dangerous hobbies, if excluded in your policy
More questions
Does life insurance pay if I die from an illness?
Yes. A regular life policy covers death from illness. Accident only plans like AD&D do not.
Are these rules the same in every state?
Not always. The state pages we checked use a two year window. Read your own policy for the exact rules.
Words to know
- Grace period
- Extra time after your premium is due to pay without losing coverage. Most policies give 31 days.
- Insured
- The person whose life the policy covers.
- Lapse
- When your policy ends because you did not pay the premium in time. Your beneficiaries will not get the death benefit.
- Policy loan
- Money you borrow from your policy's cash value. If you do not pay it back with interest, it is taken out of the death benefit.
- Premium
- The amount you pay an insurance company for your policy.
- Suicide clause
- In the first two years, companies usually will not pay the death benefit if the cause of death is suicide. The company returns the premiums instead.
