You take out a life insurance policy on someone, they die within days, do you still get the money?

Question

I recently learned my mom has a lot of policies on older family members & trying to figure out how it works exactly...

Answer 1

Mark S is mostly right.  On a conditional receipt, if the company would have covered you (ignoring the death), they will pay.

We have had several cases in our office where the application was sent up and a week later on of the covered persons dies.  So far in all of our cases, we have paid the full amount.

Answer 2

NO.

There is (at Least) a 1 year  time Period.

Answer 3

I worked on a case once where a couple took out a life insurance policy, they paid the first premium and he was killed in a freak accident the following month. When the insurance company heard about it, they actually posted back the premium, in cash, to the widow saying that the policy was not in effect for long enough. We fought it and they conceded in the end and paid a lump sum, though not what was covered.  

I know generally there is a period within which they won't pay out, obviously enough its to stop people taking out policies, having someone bumped off and reaping the rewards!!

Answer 4

You will get the money on most policies if the insured dies even on the policy issue date. However, the insurance company will investigate to make sure there was no fraud involved.

The exception is with a guaranteed issue policies (where the insurance company doesn't do a health exam). With these if the insured dies within the first two years the beneficiary will not receive the face value but will receive a refund of all premiums paid.

Answer 5

What you are asking about is what we call a "conditional receipt." This means that after filling out the paperwork and taking the first months premium, a piece of paper or two was handed to you. This "conditional receipt" acknowledges paperwork is received and should something happen to you, even if the company would fail to cover you at the end, during this time you ARE covered as if  a policy had been issued. If you die in this period, your beneficiary would receive the FULL face amount of coverage that you applied for.

Answer 6

The policy is contestable for the first two years.  So if you lie on the application, they don't pay in the first two years.  Otherwise, yes, they pay.