Life insurance, won't pay for any deaths within the first 2 years ??

Question

I just read an online article about a man who married and his wife got pregnant and they bought life insurance and she passed the physical with flying colors, and then about 2 months after that she was diagnosed with breast cancer and died 12 months later. The insurance co. didn't pay and the article stated that it is "normal" not to pay on life insurance if the claim is made within 2 years of the policy purchase ??? Is this true ?

Answer 1

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Answer 2

Not precisely.

There are several different kinds of policies.  The "guaranteed issue" ones, where "we take you no matter what", DO have a clause in them, that you have to live at least two years before dying, to collect.

The standard policy has a "contestable" period of 2 years (3 in a couple states), where if you die within that time period, the insurance company can refuse to pay out if it's suicide, or they can investigate your application, and if they find out you lied for any of the questions, they don't have to pay.

That physical isn't intended to be a complete medical history.  So if you lie about, say, being a smoker, and it's not picked up on the physical, and you die within the two years, and it shows up in your medical records, they don't cover you.

The truth is, a LOT of people lie on the applications.  Only the ones that die within the first two years get CAUGHT at it.

Answer 3

I've heard that before.  Maybe they've been watching too many tv shows where someone takes out a life insurance policy on someone and then kills them and tries to make it look accidental.

Answer 4

Insurance policies are filled with fine print. They can be written with just about any type of stipulation including the one you read about. I was almost recruited to sell insurance. One of the stipulations was that I had to buy a policy from my recruiter. My first two years of premiums went to commissions for my recruiter, her recruiter, and his/her recruiter.