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Demystifying Life Insurance: 5 Things It Covers (And 4 It Definitely Doesn’t)

Clear up the mysteries around life insurance to confirm you’re covered.

reading life insurance form
Updated Nov. 14, 2024
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When you purchase life insurance, it’s smart to understand the details of your policy. After all, you should ensure you’re covered for what you need.

Let’s explore what’s generally included and not included in a life insurance policy so you can protect your loved ones and the wealth you’ve built.

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Covered: Natural causes

Syda Productions/Adobe woman with lily flowers and coffin at funeral

If you die of natural causes, your life insurance policy will be required to pay the claim. Unfortunately, humans are susceptible to a wide range of natural causes of death. But if you pass away with a life insurance policy, these reasons are covered.

Covered: Illness

Pitchayaarch/Adobe male doctor holding female patient hand

No one wants to get sick. But if you pass away due to an illness, like cancer or influenza, your beneficiaries will receive a life insurance payment.

Covered: Accidents

bluraz/Adobe ambulance on emergency car

Accidents happen. If a fatal accident happens to you, life insurance can help provide financial stability to those you leave behind.

Some accidents that could be covered include a road incident, a travel mishap, or simply being in the wrong place at the wrong time.

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Covered: Murder (in most situations)

Aldeca Productions/Adobe police in street with autompbile

In most situations, this violent act is covered by life insurance. The exception to this rule is if the beneficiary of the policy was involved in the murder in any way.

Covered: Suicide (typically beyond two years of starting a policy)

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After purchasing a life insurance policy, suicide usually isn’t immediately covered. Instead, there’s often a waiting period of at least two years before suicide is covered. After that point, death by suicide is often a covered situation for life insurance policies.

Not covered: Engaging in risky activities

antonpedko/Adobe group of skydivers above the clouds

If you engage in risky behavior, a resulting death may not be covered by life insurance, which could stop you from keeping more money in your bank account.

Some examples of risky behavior include skydiving, car racing, deep-sea diving, participating in a war, abusing drugs or alcohol, and illegal activity.

You need to read the fine print of any policy you buy because each insurer may have a different idea of risky behaviors.

Not covered: Lying on the application

marc/Adobe woman smoking and reading

If you lie to the insurance company when submitting a life insurance application, the policy is effectively void whether or not you pay your premiums on time.

For example, let’s say you regularly smoke but choose to keep that information to yourself to avoid higher rates. If you die, the life insurance company might not cover your death.

When in doubt, be completely honest about your situation with the insurance company to avoid loss of coverage.

Not covered: Murder (if the beneficiary was involved)

fergregory/Adobe police crime scene

As previously discussed, if the beneficiary of your life insurance policy was involved in your murder in any way, they won’t receive the payout. For most, that’s a clear reason for the insurer to void the policy.

Not covered: Suicide (if it occurred within the clause period)

DC Studio/Adobe worried person with depression reading eviction notice paper

Committing suicide within a few months of purchasing a life insurance policy could mean that your death isn’t covered. 

Most insurance policies require the policy to be in effect for at least two years before suicide would be covered. However, the details vary from policy to policy.

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The best type of life insurance

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When picking the right insurance policy, an affordable term life insurance policy is often a great choice. A term policy involves a particular timeline in which you are covered.

In general, the length of your term policy should coincide with other parts of your financial timeline.

For example, you might plan to let your term policy drop when your mortgage is paid off, your kids are out of the house, or you have enough funds invested for your spouse to live comfortably through retirement.

While permanent life insurance is an option that will stick with you until your death (or until you stop paying the premiums), the complex and expensive insurance product isn’t the right fit for everyone.

Bottom line

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Whether you already have a life insurance policy or you’re shopping around for a new one, it’s helpful to understand what’s generally covered and not covered.

But you’ll also need to look at the fine print of your specific policy to confirm what’s covered so you can make sure you're prepared financially.

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Author Details

Sarah Sharkey

Sarah Sharkey is a personal finance writer who enjoys diving into the details to help readers make more informed decisions. She covers mortgages, insurance, money management, travel, and more.