What Are Life Insurance Policy Limitations?

By Lisa Olsen Posted in Life Insurance News

Knowing Life Insurance Limitations

Life insurance policy coverage is an insurance policy that is designated to pay a beneficiary a specified amount of money upon the death of the person who is insured. The insurance policy may be secured by someone other than the insured and the beneficiary of the policy may be someone other than the buyer.

There are, however exclusions, restrictions and limitations. Most life insurance policies have these that are designed to withhold payments and benefits under certain circumstances. Most life insurance companies will not pay out monies should the insured be involved in certain activities such as high-risk jobs, military action for example. Most life insurance limitations on payout include if the insured commits suicide within a given amount of time after the life insurance policy is purchased. Also, there is a contestability period that the insurance company can challenge the cause of death and may request additional information before agreeing to any payment of life insurance benefits.

Other Types Of Life Insurance Limits

Companies who provide life insurance policies are allowed to assess a policyholder on a series of things. Some of these criteria used to determine coverage limits are age, gender, height and weight, purpose of insurance, marital status and children and occupational high-risk jobs included. Depending on the answers to the above criteria, your insurance coverage policy amount(s) will be limited as to what is determined by that particular insurance company.

When referring to limitations of life insurance policies, the type of policy purchased may also be considered. For example, there are two types of life insurance policies, one is called whole life, which is life insurance covering your life. The expiration date comes once the insured has died and the benefits are paid to their beneficiary. The limited version of whole life insurance is “term” life insurance, which is a life insurance policy purchased for a particular amount of years such as five, ten, 20 and so on. You should discuss these options before purchasing your policy.

There are limitations on the amounts of coverage one can purchase. Insurance companies usually have upper limits to policy benefit payouts.

Related posts:

  1. When Someone Dies, Who “Owns” A Life Insurance Policy?
  2. What Is Whole Life Insurance?
  3. What Is An Ownership Clause In A Life Insurance Policy?
  4. What Is A Tax Free Death Benefit For Life Insurance?
  5. Who Can Contest A Beneficiary On A Life Insurance Policy?

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