Posts tagged ‘life insurance policy voided’

What Can Void My Life Insurance Policy?

Life insurance is a sound financial investment that protects loved ones in the event of an untimely death.    Sometimes there are reasons that an insurance company will void the life insurance policy though and this can create innumerable problems for the policy holder and any beneficiaries.

Term Limits and Paying the Policy

A term life insurance policy is applicable for only a finite period of time.  When the term limit on the contract is up, the policy will expire.  Regardless of whether the policy is a term policy or a whole life policy though, failure to pay the insurance premiums will result in a voided contract.  Once the policy has been cancelled, the policy holder will need to reapply for insurance and will possibly have to pay much higher insurance premiums if any of the medical history or demographic information has changed.

Suicide Clauses

Generally, insurance policies have a suicide clause included in the contract.  This clause states that if a policyholder purchases a life insurance policy and then declares suicide within two years from issuance, it will void the life insurance policy.  This is to prevent someone who is contemplating suicide from purchasing a large life insurance policy with the intention of ending their lives.  Different life insurance companies have different specific details in regards to their suicide clause.

Providing False Information

Application fraud is a guaranteed way to void a life insurance policy.  Almost all policies have a two-year contestable period during which the insurance company can rescind a policy if there is any sign of fraud or misrepresentation on the original application.  They may also refuse to pay the claim if the policy holder dies during that period and they feel that it is related to a condition that was not disclosed.  This is viewed as a contractual attempt to defraud the insurance company.

The Free Look Period

Policy holders can also void a life insurance policy within a state mandated period of time.  The free look period allows applicants to review the entire insurance policy contract for a certain period of time to determine if it is what was agreed upon.  An attached notice stating this is required on all policies.  During this period the policy holder may cancel the policy in writing at any point for any reason.  In the event that the policy is surrendered, all premiums that have already been paid must be refunded.

Life insurance policies may vary depending on the insurance company and are designed to meet the needs of the individual applicant.  However, the insurance company has the right to void a life insurance policy if the conditions of the contract are not met.  It is vital to understand the reasons that a policy can be voided so the premium payments are not wasted on a policy that will not pay a claim to beneficiaries.  To get a quote on a life insurance policy that meets your needs, utilize our online web tools today.