What does life insurance cover?

Life insurance allows you to be able to support your loved ones after your death.

In the event of your death, any beneficiaries you have named would receive a financial payout from your life insurance policy to help pay for things like funeral services and other end-of-life expenses. Although all life insurance policies offer a life insurance death benefit, coverage amounts will vary by policy and some policies may have certain restrictions on coverage.

So what does life insurance cover and what does life insurance not cover? And how does life insurance work?

In this article, we’ll go through everything life insurance covers and doesn’t cover so you can select a policy that best fits your needs.

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What does life insurance do?

Buying life insurance is a way you can help to ensure that your loved ones will be able to support themselves after your death. This is particularly important if you are the breadwinner and have a spouse or children that rely on you for income.

In the event of your death, the death benefit from your life insurance policy would be paid out to any life insurance beneficiaries you have named.

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What does life insurance cover and what doesn’t it cover?

Life insurance covers your death under most circumstances including illness, accidental death, death by natural causes, homicide, and in some cases, suicide. However, your life insurance provider may not pay a death benefit if you die in a way that is not covered.

If your death occurs while you’re committing a crime or engaging in a high-risk activity such as scuba diving or mountain climbing, your insurance company may not cover your death. To find out what types of death your policy covers and doesn’t cover, you’ll need to check with your insurance provider.

Some other things that can void your coverage are lying on your application and expired policies. If you lie on a life insurance application or your policy has expired, your insurance company will likely deny you coverage and your beneficiaries will not receive a death benefit.

Does life insurance cover suicide?

Whether or not your life insurance company will cover suicide largely depends on what kind of policy you have. For example, most life insurance policies have a suicide clause and do not cover suicide if it occurs within the first 2 years of buying the policy.

However, group life insurance does not have a suicide clause. Group life insurance usually covers suicidal death that occurs within the first two years of coverage.

Does life insurance cover medical bills?

Life insurance usually covers medical bills, although you may need to add certain riders onto your policy to be covered. You will also likely need to take a medical exam to qualify for coverage.

Most life insurance companies will also cover you if you are taking any medication. However, your rates may be higher than average depending on what you’re taking the medication for and how many medications you’re currently on.

Looking around at different life insurance companies and comparing rates can help you find a policy that will cover you and give you the most affordable rates.

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Does life insurance cover drug overdoses?

Some life insurance companies offer coverage for accidental drug overdoses. However, drug overdoses that are a result of a suicide attempt may or may not be covered depending on when the suicide occurs since most life insurance policies have a suicide clause.

If you are taking any medication, it’s important to check with your life insurance provider to see the level of coverage you have.

What kinds of expenses are covered by life insurance?

When you leave a death benefit to your beneficiaries, your beneficiaries can use the death benefit for anything they want to without restrictions. The most common expenses that beneficiaries are usually faced with after a policyholder’s death are end-of-life expenses, such as the cost of funeral services.

However, the death benefit can also cover things like medical bills, debts, rent, groceries, childcare, and any other expenses your beneficiaries need covered.

Case Studies: Utilizing Different Types of Life Insurance Coverage

Case Study 1: Term Life Insurance Policy

Sarah had a term life insurance policy with a coverage period of 20 years. Unfortunately, she passed away before the term expired. Her beneficiaries, her spouse and children, received the death benefit from the policy.

The payout provided financial support to cover funeral expenses, outstanding debts, and replace Sarah’s lost income. The term life insurance policy effectively protected her family during the specified coverage period.

Case Study 2: Whole Life Insurance Policy

John had a whole life insurance policy that he had been paying into for several decades. When he passed away, his beneficiaries, his children, received the death benefit from the policy. The payout helped cover funeral expenses, medical bills, and provided an inheritance for his children.

The cash value component of the whole life policy also allowed John to access funds during his lifetime to pay for medical treatments and supplement his retirement income.

Case Study 3: Universal Life Insurance Policy

Emily had a universal life insurance policy with a death benefit that would provide for her spouse and children in the event of her death. Unfortunately, she passed away unexpectedly in a car accident. The death benefit from the universal life policy helped cover funeral expenses, outstanding debts, and provided ongoing financial support for her family.

Additionally, the flexibility of the universal life policy allowed Emily to adjust the coverage and premium amounts over the years to meet her changing needs.

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The Bottom Line on What Life Insurance Covers

All life insurance companies cover death, but some insurance providers may not cover your death under some specific circumstances including during criminal activity or a high-risk activity. Most life insurance companies have a suicide clause which means that your suicidal death will not be covered if you die within the first 2 years of purchasing the policy.

Many life insurance companies cover medical bills, but you may need to add a special rider to your policy to qualify for coverage. Although many life insurance companies will cover you if you take medication, your rates will likely be higher than average.

To get the best rates, you should compare different life insurance companies before committing to a policy. Shopping around for affordable life insurance? Enter your ZIP code below to get free quotes from the top companies in your area.

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