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What is Covered by Life Insurance?

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Life insurance can be a valuable product for many individuals and families. No matter what situation or life stage you’re in, you may be able to benefit from a life insurance policy. 

Use our guide to learn more about life insurance and find the right policy today.

Covered Expenses from Life Insurance

The money from a life insurance policy can be used for many different things. Before deciding on the amount of coverage you want your life insurance policy to provide, it’s important to consider what you want the money to be used for. Here are some examples of what the money from your life insurance policy can be used for.

Routine Bills

Think about what goes into running your household on a daily basis. You probably have rent or a mortgage to pay each month. Then there’s electricity, water, internet and phone bills. Maybe you also have monthly subscriptions like a streaming service or meal delivery kits. 

Then there are the other expenses to consider. This includes money for groceries, transportation, household supplies, clothing and so on. On top of all of that, don’t forget about premiums for your other insurance policies, such as health insurance and car insurance.

All of these bills add up and can be a burden on your family members if you pass away. A life insurance policy will allow you to select a beneficiary as the person who will receive the money from your life insurance policy in the event that you pass away. Your beneficiary can then use the money from your policy to help cover these routine bills and expenses moving forward. 

Debts

Another huge concern for many people are the debts they might leave behind. Fortunately, federal student loans are forgiven when the borrower passes away. In the case of Parent PLUS loans, the federal student loan is forgiven when the parent passes away. 

Cosigners are held jointly responsible for the debts and loans that they have signed for. If you pass away before the debt is paid off, the person that signed the loan with you will be held fully responsible for paying the remaining balance. This applies to private student loans, personal loans, car loans and even credit cards.

By purchasing a life insurance policy for yourself, you can assign the cosigner of your loans as your beneficiary. If necessary, you could even assign multiple beneficiaries to make sure that everyone is covered, including your parents, children and spouse. If you pass away before any of these debts are paid off, the beneficiary can use the money from your policy to help pay off those outstanding debts.

Expenses for Children or Other Dependents

If you’re a parent, 1 of the best reasons to purchase a life insurance policy is to help your children financially when you’re no longer around. Whether you’re a stay-at-home parent, the sole financial provider for your family or somewhere in between, you should consider the costs if you were no longer around. 

Life insurance can help your family stay financially afloat if you passed away and they lost your income. If you passing away would mean that your family would need to hire some sort of child care, it could help cover those costs as well. The money from a life insurance policy could even be used to set up a college or other fund for your children.

Charitable Giving

Did you know that you can even leave a portion or all of the money from your life insurance policy to your favorite charitable cause? In fact, it’s common for people to use their life insurance policy as a way to leave a legacy. For some, leaving a legacy means providing a large sum to a loved one to make a big purchase, such as a home. For others, it can mean supporting a charitable cause.

Causes of Death Covered 

As with any type of insurance product, life insurance policies only cover certain situations. Be sure to get familiar with the causes of death that are covered by your life insurance policy before you purchase it. 

Your life insurance policy will cover most causes of death, including the following:

Accidental Death

Accidental death refers to situations in which someone passes away due to an accident. As far as your life insurance policy is concerned, an accidental death will likely be any death that is due to any reason other than natural causes.

Common accidental deaths include automobile accidents, work-related injuries, drowning and so on. All of these situations are those that most would consider as an accident. Life insurance also considered murder as an accidental death. Even though the act of murder may not be an accident, it is considered an accidental death because it is death from a natural cause.  

Natural Causes

Life insurance policies will also pay out the money from your policy to your beneficiary if you pass away due to natural causes. Natural causes could refer to several different causes of death. 

Some examples of natural causes of death include:

  • Passing away simply due to old age
  • Terminal illnesses, such as cancer
  • Health events such as heart attack or stroke
  • Complications due to a health condition

Suicide

Life insurance policies may cover suicide as a cause of death, but there are instances where this would not be a covered cause of death. Life insurance policies come with a contestability period. This is a period of time (usually 1 or 2 years) after you purchase the life insurance policy during which your insurance company can investigate and deny claims. If death due to suicide occurs during the contestability period of the life insurance policy, your beneficiary may not receive the money from the policy.

After the contestability period is over, your life insurance policy will include suicide as a covered cause of death. Physician-assisted suicide will also be a covered cause of death after the contestability period if over, but it is not covered during the contestability period.

What is Not Covered

It’s important to understand that there are some instances in which a life insurance company will not pay beneficiaries after the death of the life insurance policyholder. To avoid this happening to your loved ones, be sure you review and adhere to your policy’s rules. These common reasons for denying life insurance claims can be easily avoided if you know what’s needed.

Not Paying the Premium

Life insurance isn’t something you can purchase and then forget about. You’ll have to make your premium payments on time to keep your life insurance policy active. Premium payments are the amount that you agree to pay for your insurance policy, usually broken out into monthly payments. 

After you purchase your policy, make sure you set a reminder or set up automatic billing so you don’t miss a payment. If your premium isn’t paid on time, the policy may become invalid and your beneficiary will not be able to benefit from an invalid life insurance policy.

Making a Misrepresentation on the Application

When you apply for a life insurance policy, you may have to answer questions about your health and lifestyle. You must answer these questions truthfully. If you fail to provide relevant personal information, your life insurance company could deny the life insurance claim after you pass away.

Examples of undisclosed personal information that could cause a problem include major health issues, family history of health issues, dangerous lifestyle activities or foreign travel. 

Life Insurance Exclusions

Your life insurance policy will have a terms and conditions section. Before you sign any contracts, it’s important to thoroughly read and make sure that you understand everything that is written in your policy documents. You’ll want to specifically look for any uncovered events and exclusions that are included in the documents. 

You Forgot to Change your Beneficiary

If you’re married, your spouse is probably a beneficiary of your life insurance policy. But if you get divorced, you could be setting your life insurance policy up for failure if you forget to change the beneficiary. 

In some cases, not changing your beneficiary after a divorce can lead to the denial of a life insurance claim after you pass away. Each state has rules regarding this, so it might be a good idea to consult with an attorney to see what you need to do.

Best Term Life Insurance Options

Finding the best insurance company can be a big help in purchasing the right life insurance policy for you. If you contact an insurance company, be sure to discuss the types of life insurance and any additional riders that it offers. 

In most cases, a term life insurance policy is a great choice. Here are some companies you should consider speaking with about purchasing a life insurance policy.

Age Requirements
18 – 80
Coverage Amounts
$100K – $10M
Get started securely through PolicyGenius’s website
Age Requirements
18 – 80
Coverage Amounts
$100K – $10M
1 Minute Review

Policygenius is a great option if you want to compare cheap life insurance companies and apply for a policy all in one place. . The service could save you up to 40% with its comparison of top-rated carriers. And because Policygenius is a marketplace, not an insurance company, you can also get unbiased life insurance advice from their licensed experts. 

Use Policygenius’ free cost calculator to help you figure out the amount of coverage you need. There are also good educational tools if you want to buy a policy on your own.

Best For
  • Comparing policies side-by-side
  • Multiple coverage options
Pros
  • Comparison of multiple policies
  • Unbiased advice from licensed insurance experts
  • Free cost calculator
Cons
  • Quotes from all providers not always available
Age Requirements
21-55
Coverage Amounts
$50,000 – $1,000,000
Get started securely through Bestow Life Insurance’s website
Age Requirements
21-55
Coverage Amounts
$50,000 – $1,000,000
1 Minute Review

Bestow offers 2 kinds of life insurance policies: 20-year level term policy or a 10-year level term policy.

Through its policies, you may qualify for up to $1 million in term life insurance. That may seem like a sizeable sum, but if you have a spouse and children, you have to consider the cost of things beyond your mortgage, such as daycare and eventually college, as well as the loss of wages over time.

Bestow uses its proprietary technology to underwrite your insurance policy, so the application process is much faster than with traditional life insurance companies. They’re also backed by Munich Re and North American Company for Life and Health Insurance, 2 A+ rated insurance companies.

Best For
  • People who are looking for short- term life insurance
  • Individuals who don’t want to go through the hassle of having a medical exam or blood work done to get coverage
Pros
  • Plans start at just $8/month
  • Decent coverage options if you need insurance quickly and without hassle
Cons
  • Offers 2 types of plans; does not offer whole or universal life insurance policies
  • The 10- and 20-year plans not available to users under 21 or older than 55
Age Requirements
25 – 50
Coverage Amounts
$100,000 to $5,000,000
Get started securely through Fabric Life Insurance’s website
Age Requirements
25 – 50
Coverage Amounts
$100,000 to $5,000,000
1 Minute Review

Fabric offers term life insurance, wills and other tools to help you better your family’s financial life. It offers 10-, 15- and 20-year terms and coverage from $100,000 to $5 million. You can use its tools to create a will or sync up on your family’s finances. Fabric offers highly reviewed online customer service through its app and website, but its policies are not yet available in every state.

Best For
  • Coverage without a medical exam, for those who qualify
  • Those who want to avoid the hassle of insurance salesmen
  • New or expecting parents looking for a broader suite of financial tools
Pros
  • Affordable premiums
  • Easy to apply for online
  • Free app with helpful tools for parents
  • You could go from click to covered in under 10 minutes
Cons
  • No term life coverage in New York, Montana or California
  • Can’t increase coverage after purchasing
Age Requirements
25-55
Coverage Amounts
$50K to $4M
Get started securely through Sproutt Life Insurance’s website
Age Requirements
25-55
Coverage Amounts
$50K to $4M
1 Minute Review

Sproutt is an independent insurance broker that connects you with a policy and provider to match up with your budget and needs. By combining technology and human touch, Sproutt creates a personal profile for every applicant and matches you with the most suitable coverage. 

This process is entirely online. You have the option to speak to an experienced Sproutt advisor for assistance. It works with top-rated life insurance carriers like AIG, SBLI, Principal and Sagicor Life. 

The company has also developed its Guided Artificial Intelligence Assessment (GAIA) platform to power the Quality of Life Index. The platform evaluates your lifestyle to offer personalized recommendations to help you live a healthier lifestyle.

Best For
  • Numerous policy and carrier options
  • Those who prefer no-exam life insurance
  • Young parents
Pros
  • Works with top-rated life insurance carriers
  • Online process
  • Connects you with the right insurer
  • Diverse policy options
Cons
  • Relatively new company
Age Requirements
18 – 64
Coverage Amounts
$50,000 – $3,000,000
Get started securely through Haven Life Insurance’s website
Age Requirements
18 – 64
Coverage Amounts
$50,000 – $3,000,000
1 Minute Review

Haven Life allows you to digitally purchase term life insurance. It is backed and wholly owned by Massachusetts Mutual Life Insurance Company, a trusted A++ business. You’ll get a user-friendly experience from Haven Life and enjoy MassMutual’s financial strength. Haven Life focuses on personable customer service (it has a rating of 4.8 out of 5 stars) and convenient modern technology.

Best For
  • Those looking for a digital buying experience
  • Relatively healthy individuals with no preexisting conditions
  • Individuals under the age of 64
Pros
  • Simple application process
  • Instant decision on coverage. If approved, it can start immediately
  • May not need a medical exam
  • Competitive rates
  • Excellent customer support
Cons
  • No permanent life plans offered
  • Higher rates for preexisting conditions
  • No coverage if you’re over 65
Age Requirements
20 – 60
Coverage Amounts
$100,000 to $8 million
Get started securely through Ladder’s website
Age Requirements
20 – 60
Coverage Amounts
$100,000 to $8 million
1 Minute Review

Ladder offers policies with no hidden fees, on-the-spot underwriting and a streamlined website. Coverage ranges from $100,000 to $8 million and you can adjust your coverage over time as needs change.

Its price lock guarantee ensures your premium won’t increase as your health changes and you age. Policies in New York are issued by Allianz Life Insurance Company of New York and in the other states and DC by Fidelity Security Life Insurance Company, Kansas City, MO. You can receive a refund within the 1st 30 days if you’re unhappy with your coverage and you can cancel at any time.

 

Best For
  • Term life insurance
  • Online application
  • Policyholders between 20 to 60 years of age
Pros
  • Up to $8 million in coverage
  • Price lock guarantee
  • No policy fees
  • 30-day money-back guarantee
  • Adjustable coverage
Cons
  • No policy riders
  • Term life insurance only

Next Steps

Now that you’re familiar with what life insurance covers, it’s time to think about whether it makes sense for you. Most people can benefit from a life insurance policy, no matter what stage of life they’re in. 
The best thing to do now is to get a free customized quote to see what life insurance policies may benefit your situation. Start with our recommended providers to find your life insurance policy today.

Our Recommendation: Find your best fit with Policygenius

Finding the right company for your situation means considering all of your options and getting the right advice. Policygenius makes it easy to get personalized quotes from top insurers and apply for your best policy all in one place. Their combination of online tools and support from unbiased, licensed experts makes Policygenius the best site to help you get insurance right.