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Insurance 
Life InsuranceUpdated Jun 13, 2023
Written byJeff Gitlen, CEPF®
Written byJeff Gitlen, CEPF®
Expertise:Student loans, personal loans, home loans, insurance, credit cards
Jeff Gitlen, CEPF®, is the director of content operations at LendEDU. He graduated from the Alfred Lerner College of Business and Economics at the University of Delaware.
Learn more about Jeff Gitlen, CEPF®
Withlife insurance, someone makes premium payments over a period of time in exchange for monetary compensation to the beneficiaries when the policyholder dies.
The person who initiates the policy can choose the specifics of how they want to pay premiums and what type of coverage they want. There are different types of policies includingterm lifeand permanent life (includewholeand universal life).
There are certain situations where life insurance isn’t paid out. For example, in the case of suicide, most policies wouldn’t pay the death benefit to the beneficiary.
So what about a case where the insured person is murdered? In many cases when there is a homicide, the policy is still paid out to the life insurance beneficiary, but there can be exceptions depending on the particulars of the situation.
What You Need to Know About Life Insurance and Murder
It would be frustrating to have someone pay a life insurance policy for many years, only to have his or her beneficiary not receive the payout upon death. As was already touched on, suicide typically isn’t covered, and sometimes death isn’t covered if it occurs while the person is committing a crime, such as drinking and driving.
If you are in the process of comparing policies, you should also look for one that covers any accidental death or health-related death. There are some policies that will also cover suicide, after the first two years.
You have to read the fine print and understand the different life insurance benefits before deciding which policy is right for you.
If death occurs during the first two years after the policy is issued, many companies have what’s called a contestability period. This means the company has the right to investigate the cause of death and obtain certain information such as an autopsy, toxicology report, and medical records.
When you’re choosing a policy, even if something isn’t necessarily covered such as murder, you can have it added for an extra cost.
Sometimes people are afraid to ask their insurance agents about how a murder is handled, but they shouldn’t be. It’s not an uncommon question, and it’s an important one to get information about when discussing life insurance quotes.
When Will a Life Insurance Company Not Pay Out for a Murder?
If the beneficiary of a policy is believed to be the one who murders the policyholder, then there’s a strong chance they won’t receive the life insurance money. Sometimes, even if a beneficiary is tried for the murder of the policyholder and they aren’t found guilty, the insurer might take them to court if they feel there’s evidence that links them to the murder. It’s less difficult in civil court than criminal court to find someone liable for a death.
If someone dies doing a dangerous or illegal activity, such as drinking and driving, his or her beneficiary might not receive a payout.
If you die because you’re committing a robbery, trespassing, or you’re part of gang activity, it’s unlikely your beneficiary is going to receive the life insurance payout. There may also be loopholes for the insurance company to avoid paying if you move out of the country and your death occurs.
If an insurance company has any reason to believe fraud could have occurred, they can investigate. Depending on their findings, they can refuse to pay beneficiaries. With a life insurance policy, it’s best to be completely honest and transparent from the start. Otherwise, you may end up paying premiums on a policy that eventually has no benefit for your loved ones.
Life Insurance and Suicide
We already briefly discussed that many life insurance policies won’t pay out if someone commits suicide. However, it can sometimes be difficult to prove that a death was a suicide, so there are instances where beneficiaries do receive the lump sum payout. Also, if someone has had their life insurance policy for more than a two-year period, there may be a payout even if they commit suicide.
Bottom Line
If a life insurance policyholder is murdered, it does not mean his or her beneficiary won’t receive the money from the policy. In fact, most murders are covered. The only time that beneficiaries wouldn’t receive a payout in the event of the policyholder’s murder would be if the insurance company investigated the death claim and found there was fraud or criminal activity, or the beneficiary was the one who committed the murder.
Before submitting a life insurance application, it’s very important to read the fine print and ensure you know what the insurance covers. Don’t be afraid to ask the insurance agent any questions you may have.
FAQs
In fact, most murders are covered. The only time that beneficiaries wouldn't receive a payout in the event of the policyholder's murder would be if the insurance company investigated the death claim and found there was fraud or criminal activity, or the beneficiary was the one who committed the murder.
Does life insurance pay out if you are murdered? ›
Does life insurance cover murder? Life insurance covers murder unless the beneficiary is proven to be involved, adhering to the Slayer Rule, which prevents payout under such circ*mstances.
What are reasons life insurance won't pay out? ›
Top reasons life insurance won't pay out may be because the policyholder lied on their application, their death was the result of suicide, or they passed away during the waiting period.
Does life insurance actually pay out? ›
The payout from a life insurance policy is called a death benefit and it is distributed to the beneficiary of the policyholder. Permanent or whole life insurance pays out in full when the policyholder passes away, while term life insurance pays out if death occurs during the policy's specified term.
In what cases does life insurance not pay? ›
Instances of lying, criminal activity, or dangerous behavior that's not disclosed upfront could all be reasons life insurance won't pay out.
What death is not covered by life insurance? ›
Life insurance doesn't typically pay out in these circ*mstances: Murder: If your beneficiaries murder you or are closely tied to your murder, they won't receive the death benefit, per the slayer rule. Suicide: A payout won't apply if you commit suicide within the first two years of purchasing your policy.
Does life insurance pay out immediately after death? ›
In many states, the insurance company has 30 days to review your life insurance claim. During this time, they can submit additional questions, deny the claim, or pay the claim. It's likely that the company will pay the claim as soon as they are able since delaying payment costs them interest charges.
What percentage of life insurance never pays out? ›
Because policyholders can outlive their policies, there's a chance that the death benefit will never be paid out. In fact, a study done by Penn State University indicates that 99 percent of all term policies never pay out a death benefit.
What is the average death benefit payout? ›
Whether you're trying to choose the right life insurance policy or you're a beneficiary of an existing policy, it's valuable to know the average life insurance payout you might expect in the U.S. Here's what beneficiaries can expect on average: Average payout: $189,000. Time to payout: 30-60 days after filing.
What age does life insurance not pay? ›
What Age Does Life Insurance Expire? The age 100 maturity date means the policy expires and coverage ends when the insured person turns 100. One possible result is that the policyholder (and their heirs) get nothing, despite decades of paying into the policy. But times change, and now people tend to live longer.
A $10,000 term life insurance policy has no cash value. However, a permanent life insurance policy might. Usually, the cash value steadily accumulates over the years, but the cash value of some policies can decrease if an investment performs poorly.
What not to say when applying for life insurance? ›
For example, applicants might lie about their age, income, weight, medical conditions, family medical history or occupation. It's also relatively common for applicants to lie about their alcohol or drug use.
How long does it take for a beneficiary to receive money from life insurance? ›
Life insurance companies usually pay out within 60 days of receiving a death claim filing. Beneficiaries must file a death claim and verify their identity before receiving payment. The benefit could be delayed or denied due to policy lapses, fraud, or certain causes of death.
Can life insurance refuse to pay out? ›
Life insurance covers death due to natural causes, illness, and accidents. However, the insurance company can deny paying out your death benefit in certain circ*mstances, such as if you lie on your application, engage in risky behaviors, or fail to pay your premiums.
Does accidental death insurance cover homicide? ›
A death due to “homicide” would also be considered an accidental death in most instances since the manner of death is both sudden and unexpected. However, benefits would not be payable for natural death, even if it occurs suddenly, or for suicide.
How long do you have to have life insurance before it pays out? ›
How term life insurance works: The basics. A term life insurance policy is the simplest, purest form of life insurance : You pay a premium for a period of time – typically between 10 and 30 years – and if you die during that time a cash benefit is paid to your family (or anyone else you name as your beneficiary).
What type of death is not covered in term insurance? ›
Accidental death due to intoxication or drugs or if the insured is involved in criminal activity is not entitled to any payouts. Also, accidental deaths when during adventure sports like skydiving, paragliding, bungee jumping, among others too are not covered by term plans.
Will life insurance pay out for an overdose? ›
Does Life Insurance Cover Drug Overdose? Yes, life insurance companies will pay out the death benefit if you die from a drug overdose. However, if you pass away during the contestability period or during the suicide clause period, the carrier may challenge the death claim.
Does life insurance pay out for natural death? ›
Life insurance covers most causes of death, including natural and accidental causes, suicide, and homicide. However, some caveats may prevent your beneficiaries from receiving their payout. That's why it's important to discuss life insurance coverage limitations with your agent or broker before purchasing a policy.
Does life insurance pay out on death? ›
Yes, life insurance usually pays out for deaths by natural causes. A 'natural' death means things like accidents, most illnesses or old age. The death must occur during the cover period.
Life Insurance
