Accidental Overdose and Life Insurance
Seeing how that in 2019, more than 69,000 people died from an accidental overdose in America alone, it’s no wonder what was once an uncommon question asked by an individual now becomes a “somewhat” common topic.
Particularly when someone is looking to purchase a life insurance policy on another person!
This is why…
We wanted to take a moment and discuss some of the main factors that can come into play when determining if and when a life insurance policy would provide a death benefit to an insured’s beneficiary in the event that the did die from an accidental overdose.
Questions that will be addressed will include:
- Will a life insurance policy pay a death benefit if an insured dies from an accidental overdose?
- What is a “contestability period” with regards to a traditional life insurance policy?
- Do all life insurance products have a “contestability period”?
- What options do I have if a life insurance company chooses to deny a loved one’s life insurance policy?
So, without further ado, let’s dive right in!
Will a life insurance policy pay a death benefit if an insured dies from an accidental overdose?
This is a tricky question because there are some cases where a life insurance company may be justified in not wanting to or “having” to pay out a death benefit to an insured due to an accidental overdose.
If an individual purchased a life insurance policy two months ago, and on their application they KNOWINGLY CHOSE not to disclose that they were taking any kind of prescription medications and/or narcotics which they know would have prevented them from being able to qualify for coverage. It is reasonable to assume that a life insurance company would NOT want to be held responsible for a legal contract where they were lied to.
If an individual purchased a life insurance policy two months ago, then immediately afterward was involved in a car accident and was prescribed a powerful pain narcotic which ultimately causes the insured to suffer from an accidental overdose, an insurance company wouldn’t have any recourse or objection to paying out on this claim.
This is why…
There isn’t a “yes” or “no” answer to this question. It’s all going to come down to one’s circumstances. That would be, of course, if the accidental overdose occurred within the “period of contestability” clause within the life insurance policy being questioned.
What is a “contestability period” with regards to a traditional life insurance policy?
A Period of Contestability for the Insurance Company is a term used to describe a benefit written into most (if not all) traditional life insurance policies which state that an insurance company has up to 2 years from the date that policy goes in to force to contest or dispute a claim to deny it.
This “period of contestability” only lasts for a year or two and is exclusively designed to help protect an insurance company against potential “fraud.” This is why, during this period of contestability questions like:
- Was the applicant honest during the time of purchase?
- And/or did the applicant intentionally “omit” anything that would have potentially prevented him or her from being able to qualify for coverage?
There is a chance that an insurance company might have a valid reason for not wanting to honor their side of the insurance contract. This brings us to our next question, which is…
Do all life insurance products have a “contestability period”?
Up until now, we’ve pretty much only focused on traditional term or whole life insurance policies, which will use one’s current health status and other “lifestyle” choices to determine who can and can’t qualify for coverage.
That said however…
There are some “alternative” products some folks who may turn to if they are not able to qualify for a traditional term or whole life insurance policy. Which is why we now want to turn our attention and discuss two popular options:
Guaranteed Issue Life Insurance policies
Accidental Death Policies.
And discuss whether or not either one of these types of products would provide coverage to someone if they died from an accidental overdose.
Guaranteed Issue Life Insurance Policies and Accidental Death Policies.
Guaranteed issue life insurance policies are life insurance policies that won’t require one to have to “medically” qualify for coverage. This is why, during the application process, you won’t be asked any medical questions other than how old you are.
Which means that…
They’re not going to ask if you are taking any prescription medications or whether or not you use any illicit drugs. In fact, most guaranteed issue life insurance policies are only going to ask you three questions:
- How old are you?
- Are you a US citizen?
- And what state do you live in?
So, unless you lie about your age, citizenship, or permanent resident, it’s pretty much impossible to mislead an insurance company about your current health status. After all, it’s not like they are even going to ask you about it.
This is only because guaranteed issue life insurance policies use a particular clause called a “graded death benefit” to protect themselves from insuring anyone too risky.
A graded death benefit limits a life insurance companies exposure to undo risk by stating that a guaranteed issue life insurance policy will only begin covering an individual for “natural causes” or a “self-inflicted” causes of death after they have owned their policy for a minimum of two years.
During this time…
Most (if not all) guaranteed issue life insurance policies will essentially function like an Accidental Death Policy in that they will only provide your loved one if you die from an “accidental cause” like a:
- Motor vehicle accident,
- Slip and fall,
- Victim of crime,
- Natural disease.
This is why…
If you do decide to purchase a guaranteed issue life insurance policy on yourself, one should assume that an accidental overdose would not be covered for at least the first two years.
Probably wouldn’t ever be covered by an accidental death policy unless, of course, you specifically see it as being something that is covered within the actual policy itself.
This brings us to the last topic that we wanted to cover here today, which is…
What options do I have if a life insurance company chooses to deny a loved one’s life insurance policy?
At the end of the day, whether you purchase a traditional life insurance policy, a guaranteed issue life insurance policy or an accidental death policy; what you have purchased is a “legal contract”.
For this reason…
If you find yourself in a situation where a life insurance company is telling you that they do not need to pay out a death benefit for a life insurance policy where you were made the beneficiary, you’re first step would be to first explain to you in writing when they are not legally responsible to do so.
You will have two options, one you can seek out your legal counsel and have them determine whether or not the insurance company is acting irresponsibly and/or you could reach out to your own state’s insurance commission and ask them for help/advice.
You can protect your rights, and if the insurance policy your loved one did purchase won’t provide coverage, you can at least have someone explain to you why.