Life cover is a way you can protect your loved ones by offering them a financial safety net that will help them take care of their needs when you are no longer alive. However, you can also use it whilst you are still living to take care of the financial responsibility of being diagnosed with a terminal illness.
But, what happens to the funeral policy or life cover that you have recently taken out should you happen to pass away in a short space of time? Will your insurer pay-out the claim or will it be denied?
Understanding the claim process
Understanding how the claim process works will make placing a claim easier and it can also help you and your loved ones avoid being disappointed. Each insurer may have a different way in which you can place a claim, which can be done online or by calling your insurer, to begin the process.
You must make sure that the information you have given your insurer when applying is 100% accurate. Make sure to inform your insurer of any health changes that can affect your policy and that your premiums are up to date to avoid having a claim denied. Being aware of the documents that are needed to process a claim is also essential.
It is also the claim process that will affect whether your policy gets paid out to your loved ones or not. Reading the terms and conditions of your policy will break down what will happen once you have placed a claim and how long it will take for your policy to be paid out. Carefully read these to understand what will happen during the claim process.
How you die can affect your policy
How you die has ripple effects on many things. One of these is an impact on your funeral or life cover policy. Insurers go through a review process to check that there has been no foul play to deter fraudulent claims on something that you have been working so hard to set up. Once your loved ones have placed a claim, your insurer will begin the review process to see that all is in order.
This will be carried out as quickly as possible to ensure that your loved ones receive the payout to carry on funeral arrangements. Life insurance payouts are known to take slightly longer due to this process where an insurer investigates that everything is in order and that the death of the policyholder was due to natural or accidental causes. This process is also to protect insurers and policyholders from fraudulent claims.
The 2-year clause
Insurers have a list of exclusions of things that they will not cover. There are also conditions to certain types of deaths to prevent people from committing fraud. One of these is the 2-year (24 month) suicide clause.
Typically, most life insurance policies will state that your life cover won’t payout if you commit suicide within a certain time period after taking the policy. This period is normally two years, but is up to the individual insurer. Participating in activities that place your life at risk can also affect a payout. However, should you die from an accident or an unforeseen illness, it is possible to have your claim processed.
Will you be able to claim?
Should everything be in order regarding your premiums and there is no foul play detected once the review process has been completed, an insurer is liable to pay out a claim. Always keep in mind that honesty is your best policy to avoid any frustration and disappointment.
