Everyone wants to have the assurance that they leave something behind for their families when they pass away. They want to have expenses paid that cover funeral costs, to pay off debt, and perhaps a little leftover as a legacy. Insurance companies offer policies that will cover most common medical and accidental death causes. There are few occurrences of death they won’t cover. But what about when that death is at the hand of the insured? Will life insurance in Texas cover for suicidal death?
What is Life Insurance?
When you purchase any type of insurance, you have choices to make. The same can be said of life insurance. There are many options to meet the need of the one seeking to be insured. To better understand how life insurance in Texas coverage works, one must understand each policy and if it will suit your need.
Types of Insurance
There are two basic types of Life Insurance, but there are many variations between the two types. We are just going to give you the basics here:
- Term Life Insurance – Term life insurance is set for a specific time period. These policies vary from one to thirty years. It is fairly simple. If you pass away while the policy is active, then the insurance company will pay out the face amount of the policy.
- Whole Life Insurance – Like a term policy, the company will pay out the face amount of the policy, only there is no time limit specified. The policy will remain active until the insured passes away.
There are many subsets of each, especially with whole life. Some whole life insurance can be used to plan for your future. There is also a third type, Universal Life, and variations of it that you can invest in, but it carries heavy risk. Your death benefit will depend on the policy’s cash value, which will fluctuate since it is tied to the stock market.
How Does Life Insurance in Texas Work?
The primary thing to understand about life insurance is the younger and healthier you are, the more affordable life insurance in Texas will be. The most common issue with life insurance is that most people don’t think about it until they are older or diagnosed with an illness that causes them to think about the need for it. At that point, Texas life insurance will be quite costly, or you may find yourself uninsurable, depending on the situation.
Life insurance is a gamble by the insurance company. Let’s be honest, insurance companies look at the person applying and determine how much longer that person has to live and decide if they want to accept that type of risk. If a person is young and healthy, they will pay a lower premium; if an individual is older and have a history of health issues, their policy will have a higher premium. Insurance companies can also look at family history, which can affect your insurance cost. It could warrant an insurance provider to increase your premium. And full disclosure is the law. Failure to inform an insurer about your family history allows them to cancel your policy without paying benefits; all they would be obligated to do is return the premium paid into the policy to date.
What Are Life Insurance Exclusions?
There aren’t many things that would exclude you from getting a life insurance policy, most would either attach a rider, an amendment that if you died from that condition, your policy would not pay out, or increase your premium because you are an increased risk. Everyone is pretty much able to get a life insurance policy in Texas. It is more of a matter of whether you are willing to pay the price to get it.
A few of the reasons a policy requires an applicant to disclose information is:
- Risky job or hobby. Those who enjoy the outdoors and mountain climbing, whitewater rafting, and racecar driving may find themselves with a higher premium or their policy with a rider excluding a payout if their death resulted from this activity.
- Medical health. A family history of illness like heart disease, cancer, or even prescription use could tag on a higher premium and a denied payout if death were a cause related to the issue.
- Risky behavior. A history of drug use, criminal record, or arrest for DUI will increase your premiums. And failure to disclose this information, if discovered upon your death, will void your benefit payout.
- Dangerous Occupations. Those with risky jobs like construction work, law enforcement, firefighting, and military personnel will find a higher-than-normal premium rate.
When one chooses to leave anything off their application, the insurance company can choose to deny their application. If the insured has an application in force when they pass away, and only then the omission is discovered, the death benefit will be denied, and the beneficiary will be given the premiums paid into the policy
Life Insurance in Texas Stipulations
There are other stipulations built within a life insurance policy. A free look period, a contestability clause, and the suicide clause. Each has a time period attached and stipulations for a policy to be either canceled by the insured or denied by the insurance company.
Free Look Period – With life insurance policies in Texas, there is either a 10 or 30-day free look period. If you choose to cancel your policy within this period, you can do so with a full refund, no questions asked.
Contestability Clause – Once the policy is active, for the insurance company, there is a two-year contestability clause built into every policy. This is the time period when the insurance company can contest a payout. If the insured dies within the first two years, the company reviews the application for any conditions the policyholder may have withheld that attributed to their death. For instance, if the insured died of lung disease, they will examine the history of the insured to ensure that they were not a smoker if they had indicated on their application that they were not a smoker.
Occasionally this can also spill over to a family history of medical conditions. So full disclosure is a must, even to the family history. Better safe than sorry. Once you are beyond the two-year contestability clause, an insurance company is less likely to fight, but it doesn’t mean they won’t attempt to.
Suicide Clause – Within an insurance policy, there is a separate clause from the contestability clause. It stipulates that the insurance company does not have to pay out if an insured dies from a self-inflicted injury within the first two years of the policy becoming active. It will only refund the collected premiums. However, if the policy is beyond the two-year contestability period, most times, it will pay out the face value of the policy.
This suicide clause also applies in a right-to-die state. Doctor-assisted death is not a loophole to the insurance rule and will not provide a payout within the suicide clause period nor the contestability clause period.
Life insurance stipulations, especially the free look period, can vary by insurance company as well as by state. Read your policy carefully and shop around to ensure you are getting the life insurance policy that meets your needs.
Summary
Life insurance in Texas is intended to assist with burial costs and to assist family members with other final expenses like paying off bills and other expenses of the deceased. While, in some cases, it can cover the expenses of those who chose suicide. We at Cover Mile want to let you know help is out there. Dial 988 from any phone; this is the national suicide hotline that can assist you.
Cover Mile aims to connect you with an insurance company that provides the best life insurance in Texas at the lowest rates for you and your family. Contact us today.
