With life insurance, someone makes premium payments over a period of time in exchange for monetary compensation to the beneficiaries when the policyholder dies.
The person who initiates the policy can choose the specifics of how they want to pay premiums and what type of coverage they want. There are different types of policies including term life and permanent life (include whole and universal life).
There are certain situations where life insurance isn’t paid out. For example, in the case of suicide, most policies wouldn’t pay the death benefit to the beneficiary.
So what about a case where the insured person is murdered? In many cases when there is a homicide, the policy is still paid out to the life insurance beneficiary, but there can be exceptions depending on the particulars of the situation.
What You Need to Know About Life Insurance and Murder
It would be frustrating to have someone pay a life insurance policy for many years, only to have his or her beneficiary not receive the payout upon death. As was already touched on, suicide typically isn’t covered, and sometimes death isn’t covered if it occurs while the person is committing a crime, such as drinking and driving.
If you are in the process of comparing policies, you should also look for one that covers any accidental death or health-related death. There are some policies that will also cover suicide, after the first two years.
You have to read the fine print and understand the different life insurance benefits before deciding which policy is right for you.
If death occurs during the first two years after the policy is issued, many companies have what’s called a contestability period. This means the company has the right to investigate the cause of death and obtain certain information such as an autopsy, toxicology report, and medical records.
When you’re choosing a policy, even if something isn’t necessarily covered such as murder, you can have it added for an extra cost.
Sometimes people are afraid to ask their insurance agents about how a murder is handled, but they shouldn’t be. It’s not an uncommon question, and it’s an important one to get information about when discussing life insurance quotes.
When Will a Life Insurance Company Not Pay Out for a Murder?
If the beneficiary of a policy is believed to be the one who murders the policyholder, then there’s a strong chance they won’t receive the life insurance money. Sometimes, even if a beneficiary is tried for the murder of the policyholder and they aren’t found guilty, the insurer might take them to court if they feel there’s evidence that links them to the murder. It’s less difficult in civil court than criminal court to find someone liable for a death.
If someone dies doing a dangerous or illegal activity, such as drinking and driving, his or her beneficiary might not receive a payout.
If you die because you’re committing a robbery, trespassing, or you’re part of gang activity, it’s unlikely your beneficiary is going to receive the life insurance payout. There may also be loopholes for the insurance company to avoid paying if you move out of the country and your death occurs.
If an insurance company has any reason to believe fraud could have occurred, they can investigate. Depending on their findings, they can refuse to pay beneficiaries. With a life insurance policy, it’s best to be completely honest and transparent from the start. Otherwise, you may end up paying premiums on a policy that eventually has no benefit for your loved ones.
Life Insurance and Suicide
We already briefly discussed that many life insurance policies won’t pay out if someone commits suicide. However, it can sometimes be difficult to prove that a death was a suicide, so there are instances where beneficiaries do receive the lump sum payout. Also, if someone has had their life insurance policy for more than a two-year period, there may be a payout even if they commit suicide.
Bottom Line
If a life insurance policyholder is murdered, it does not mean his or her beneficiary won’t receive the money from the policy. In fact, most murders are covered. The only time that beneficiaries wouldn’t receive a payout in the event of the policyholder’s murder would be if the insurance company investigated the death claim and found there was fraud or criminal activity, or the beneficiary was the one who committed the murder.
Before submitting a life insurance application, it’s very important to read the fine print and ensure you know what the insurance covers. Don’t be afraid to ask the insurance agent any questions you may have.