Why Would Life Insurance Policy Be Cancelled
Reader’s Question:
Why are the reason why life insurance policies gets canceled?
Maddie
San Antonio, Texas
You would think that life insurance policies would not be canceled because, after all, death is inevitable, right? However, it does happen.
Any falsification of information in the application could cause the life insurance policy‘s cancellation. The insurance company is given two years time to discover any pertinent falsehood. After such, the insurance company can no longer cancel the contract, however pertinent the falsification turns out to be.
Age, even if it is considered as a material misstatement, will not bring about a cancellation. The face value of the policy, however, will be adjusted to the amount that the insurance payment would have procured had the right age been listed.
Essentially, the only time when an a life insurance company denies a claim or cancels a contract is when if the insured perpetrates a fraud, like cheating on the physical exam by having someone else take it, if the beneficiary of the life insurance murders the insured, or if the insurance applicant has no insurable interest in the person to be insured. There is also a provision for suicide victims. If the insured commits suicide within a year or two years (depending on the policy) after taking out the life insurance policy, the insurance company will reimburse the premiums.
I hope Ive been of help to you there in San Antonio, TX, Maddie.
Tags: cancelled policy, fraud, life insurance polices, payment, suicide