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life insurance answers
Talk to one of our life insurance specialists for help finding a life insurance policy that meets your needs.
Life insurance provides financial resources to beneficiaries upon the insured person's death, offering critical support during an already difficult time. The death benefit payout is typically tax-free and can be used however the beneficiaries choose—whether to cover funeral and burial costs, pay off existing debts, replace lost income or help fund long-term goals such as a child's education or a surviving spouse's retirement.
Most people understand that life insurance covers common and unexpected events, including sudden illnesses, rare diseases and workplace accidents. In general, life insurance is designed to protect families from the financial fallout of life's most unpredictable moments. But questions often arise around more complicated and emotionally sensitive circumstances, such as suicide, assisted suicide and murder. It is important to know how your life insurance policy will cover these situations.
Life insurance is a contract: you pay the premiums to an insurer, and the insurer promises a death benefit to your designated beneficiaries. (Life insurance benefits are generally tax-free.) Life insurance can be term—typically 10, 20 or 30 years, with the option to extend—or permanent, which doesn't expire as long as premiums are paid.
Life insurance policies cover a wide range of causes of death, from old age to a workplace accident to a sudden illness. Specific coverage details will be included in the contract; it is essential to review it thoroughly before signing.
Most life insurance policies include a contestability period of one to two years, during which the insurer can investigate claims for misrepresentation or fraud (for example, knowingly misrepresenting your medical history on your life insurance application in an effort to get the application approved). In many cases, disputes over life insurance claims aren't about the cause of death, but about whether the policyholder was truthful during the application process or whether the policy was still within its contestability period.
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Another common provision in life insurance policies is a “suicide clause.” While it is a common belief that life insurance would not pay out in the event of the insured person's death by suicide, there is more nuance you should understand. Suicide clauses typically let an insurer deny coverage for death by suicide during a suicide exclusion period. After this period of time ends, suicide is generally covered by life insurance.
For anyone facing personal or immediate concerns about suicide, a healthcare provider or mental health professional can be a source of support. If you or someone you know is in an emotional crisis, please call, text or chat with the Suicide and Crisis Lifeline at 988, or contact the Crisis Text Line by texting TALK to 741741.
Medically assisted suicide (MAS) is illegal in most states. In those states, life insurance policies typically treat MAS in the same manner as suicide, meaning the death is not covered during the one- or two-year suicide exclusion period.
In states that have enacted statutes authorizing MAS under defined conditions, the laws generally provide that the terminal illness, rather than the ingestion of medication, is listed as the cause of death on the death certificate, and claims are therefore handled as deaths resulting from illness rather than suicide.
Whether a life insurance policy covers a death due to overdose often depends on how the overdose was classified. If the overdose was found to be accidental, it is typically covered the same way any other unintentional death is covered. If it is ruled intentional, it may fall under the suicide clause and be subject to the contestability period.
It is important to be forthcoming about substance use when applying for a life insurance policy.
You should review your life insurance annually and when you experience a major life event, but there are additional times when you should reassess your policy. This guide highlights 11 of these important, often overlooked, moments.
Learn MoreIn most cases, life insurance policies do typically cover a death that results from homicide. The primary consideration is whether there is beneficiary involvement in the homicide. If the person named as beneficiary is found legally responsible for the insured person's death, the beneficiary cannot receive the payout from the life insurance policy. In those cases, the benefit typically goes to a contingent beneficiary or the decedent's estate.
Despite early pandemic fears, most insurers treat COVID like any other illness and pay benefits accordingly. Pandemic exclusions are rare in modern-day life insurance policies.
Life insurance policies typically include a contestability period. During that time, if an insurer discovers that material information about medical history was misrepresented or omitted on the application, a claim could be denied.
Life insurance is designed to provide financial protection in difficult and sometimes unexpected circumstances. Understanding your policy before you need it can provide peace of mind, and asking these difficult questions now helps ensure your loved ones are protected later.
Life insurance acts as a contract between you and an insurer. You pay premiums, and the insurer promises a payout to your beneficiaries if you pass away. This money helps loved ones cover funeral costs, debts and daily expenses.
Most policies cover a wide range of causes of death. This includes natural causes like old age, sudden illnesses like pneumonia and workplace accidents.
It depends on timing. Most policies include a suicide exclusion period of one or two years. If a death by suicide occurs during this window, the insurer may deny the claim. After this period ends, policies generally cover suicide.
In most states, medically assisted suicide (MAS) is illegal and is generally treated the same as suicide for life insurance purposes. In states where MAS is permitted, claims are typically handled as deaths resulting from illness rather than suicide.
Insurers look at whether the overdose was accidental or intentional. They typically cover accidental overdoses like other unintentional deaths. If they rule it intentional, it may fall under the suicide clause.
Yes, unless the beneficiary is the one responsible for the death. In that case, the payout goes to a contingent beneficiary or the estate.
Life insurance policies typically include a contestability period, during which insurers may review claims to determine whether material information was misrepresented or omitted on the application.
life insurance answers
Talk to one of our life insurance specialists for help finding a life insurance policy that meets your needs.
ALAN-30390-226-XX
This information is being provided for general informational purposes only. The Auto Club Group does not assume any liability in connection with providing this information.
Life insurance underwritten and annuities offered by AAA Life Insurance Company, Livonia, Michigan. AAA Life Insurance Company is licensed in all states except NY. CA Certificate of Authority #07861. Products and their features may not be available in all states.
AAA Life and its agents do not provide legal, financial, or tax advice. Therefore, you may wish to consult independent professional advice prior to the purchase of any contract.
This is a summary of product provisions and does not contain all of the benefits and exclusions. For complete terms of the insurance coverage or annuity, please contact your agent or refer to the policy/contract.
Annuities - LA
Annuities are not short-term products. During the surrender charge period, withdrawals exceeding 10% will be subject to a surrender charge that may be higher than fees associated with other types of financial products and may reduce principal. Withdrawals prior to 59½ may be subject to IRS penalties, separate from the annuity’s schedule of surrender charges.
EliteGuarantee Deferred Annuity - LAEG Contract Form Series: ICC11-4101/DA-4101 (In OR: ICC11-4101)
Platinum Bonus Annuity - LAPB Contract Form Series: ICC11-4111/DA-4111 (In OR: ICC11-4111)
Guaranteed Income Annuity - LAGI Contract Form Series: ICC14-4120/SPIA-4120 (In OR: ICC14-4120)
The payout amount you will receive is based on your individual circumstances, the options you select at the time of application and your initial premium payment.
For California residents: If you are 65 years of age or older, pursuant to California Insurance Code §789.8(b), we are required to advise you of the following. If you plan on the sale or liquidation of any stock, bond, IRA, certificate of deposit, mutual fund, annuity, or other asset to fund the purchase of this product, please be advised that you may be subject to some or all of the following as a result of the sale or liquidation: Adverse tax consequences; early withdrawal penalties; or other costs and/or penalties. You or your agent may also wish to consult independent legal or financial advice before selling or liquidating any assets and prior to the purchase of any life or annuity products being solicited, offered for sale, or sold.
Term Life Insurance - LT
Premiums are guaranteed. They are level for the premium period and increase annually thereafter. Any sample premiums are examples only and may vary based on your personal health history and underwriting guidelines. The answers provided to the health questions are used to determine eligibility for coverage. Not all applicants will qualify. Product and its features may not be available in all states. Coverage ends at age 95.
If insured is diagnosed with a terminal illness that will cause death in 12 mos. or less, up to 50% of the total benefit can be applied for, and used as insured chooses. The remaining benefit payable at death will be reduced by the Accelerated Death Benefit paid and any accrued and unpaid interest (8% annual interest rate applies). Receipt of Accelerated Death Benefits may affect eligibility for public assistance programs and may be taxable. Please consult the appropriate social service agency and seek the advice of tax counsel before applying for these funds. The Accelerated Death Benefit is not available if the terminal illness results from an intentionally self-inflicted injury. This benefit may not be available in all states.
Traditional Term - LTT Policy Form Series: ICC19-1801/1801 (In OR: ICC19-1801)
Group Direct Term Policy Form Series: GT8200
Individual Direct Term Policy Form Series: ICC16-1501
Universal Life Insurance – LULG
Health history, underwriting guidelines and the answers provided to health questions are used to determine approval for coverage. Not all applicants will qualify. Rates may vary.
Lifetime Universal Life Insurance - LUL Health history, underwriting guidelines and the answers provided to health questions are used to determine approval for coverage. Not all applicants will qualify. Rates may vary.
Policy Form Series: ICC19-4701/4701 (In OR: ICC19-4701)
If insured is diagnosed with a terminal illness that will cause death in 12 mos. or less, up to 50% of the total benefit can be applied for, and used as insured chooses. The remaining benefit payable at death will be reduced by the Accelerated Death Benefit paid and any accrued and unpaid interest (7% annual interest rate applies). Receipt of Accelerated Death Benefits may affect eligibility for public assistance programs and may be taxable. Please consult the appropriate social service agency and seek the advice of tax counsel before applying for these funds. The Accelerated Death Benefit is not available if the terminal illness results from an intentionally self-inflicted injury. This benefit may not be available in all states.
Accumulator Universal Life Insurance - LULA Health history, underwriting guidelines and the answers provided to health questions are used to determine approval for coverage. Not all applicants will qualify. Rates may vary.
Policy Form Series: ICC19-3701/3701 (In OR: ICC19-3701)
If insured is diagnosed with a terminal illness that will cause death in 12 mos. or less, up to 50% of the total benefit can be applied for, and used as insured chooses. The remaining benefit payable at death will be reduced by the Accelerated Death Benefit paid and any accrued and unpaid interest (5% annual interest rate applies). Receipt of Accelerated Death Benefits may affect eligibility for public assistance programs and may be taxable. Please consult the appropriate social service agency and seek the advice of tax counsel before applying for these funds. The Accelerated Death Benefit is not available if the terminal illness results from an intentionally self-inflicted injury. This benefit may not be available in all states.
Whole Life Insurance
Whole Life Insurance (for coverage amounts of $30,000 or more) - LWL Policy Form Series: ICC18-5601/5601 (In OR: ICC18-5601)
Health history, underwriting guidelines and the answers provided to health questions are used to determine approval for coverage. Not all applicants will qualify. Rates may vary.
If insured is diagnosed with a terminal illness that will cause death in 12 mos. or less, up to 50% of the total benefit can be applied for, and used as insured chooses. The remaining benefit payable at death will be reduced by the Accelerated Death Benefit paid and any accrued and unpaid interest (8% annual interest rate applies). Receipt of Accelerated Death Benefits may affect eligibility for public assistance programs and may be taxable. Please consult the appropriate social service agency and seek the advice of tax counsel before applying for these funds. The Accelerated Death Benefit is not available if the terminal illness results from an intentionally self-inflicted injury. This benefit may not be available in all states.
Rapid Issue Whole Life Insurance (for coverage amounts of $25,000 or less) - LRIWL Policy Form Series ICC20-7001/7001 (In OR: ICC20-7001)
Responses to the application will be used to determine approval for coverage. Not all applicants will qualify.
This Whole Life policy is referred to as graded benefit whole life insurance. If you suffer a non-accidental death within the first two years of coverage, your beneficiaries will get 100% of the base premiums you paid, plus 35%. After two years, the total amount of your coverage is paid for death due to any cause.
After the first two years of coverage, if insured is diagnosed with a terminal illness that will cause death in 12 mos. or less, up to 50% of the total benefit can be applied for, and used as insured chooses. The remaining benefit payable at death will be reduced by the Accelerated Death Benefit paid and any accrued and unpaid interest (8% annual interest rate applies). Receipt of Accelerated Death Benefits may affect eligibility for public assistance programs and may be taxable. Please consult the appropriate social service agency and seek the advice of tax counsel before applying for these funds. The Accelerated Death Benefit is not available if the terminal illness results from an intentionally self-inflicted injury. This benefit may not be available in all states.
Guaranteed Issue Whole Life Insurance - LGIWL Policy Form Series: ICC16-6301/GWL6301 (In OR: ICC16-6301)
The maximum amount of Guaranteed Issue Whole Life insurance coverage per insured is $25,000.00. Subject to age requirements and policy limit restrictions.
This Guaranteed Issue Whole Life policy is referred to as graded benefit whole life insurance. If you suffer a non-accidental death within the first two years of coverage, your beneficiaries will get 100% of the level monthly premiums you paid, plus 30%. After two years, the total amount of your coverage is paid for death due to any cause.
If you are a California resident 65 years of age or older, we are required to advise you of the following. The sale or liquidation of any stock, bond, IRA, certificate of deposit, mutual fund, annuity, or other asset to fund the purchase of this product may have tax consequences, early withdrawal penalties, or other costs or penalties as a result of the sale or liquidation. You may wish to consult independent legal or financial advice before selling or liquidating any assets and prior to the purchase of any life or annuity products being solicited, offered for sale, or sold.
