Life not insured?
If you don’t have any coverage or know of someone who died with no life insurance, your on the right page. We provide independent and unbiased information on life insurance. Start researching your options. See which policy is right for you, how much coverage you may need or whether you require a policy at all. There are several kinds of policies which basically fall into two main categories: term and whole life (or permanent). You can find the specific features of each type above in our navigation bar.
If you already have a Policy
There are various ways you can be left without any life insurance, whether intentionally or sometimes even without knowing. The most obvious instance is simply where you don’t purchase a policy or if you have been denied coverage.
Alarmingly, even if you buy a policy and pay premiums you can still end up not having any death benefits paid out. One way this can happen is through an exclusion applying under the contract, resulting in the claim being denied. For example, in most states there is no life insurance for suicide within a two year exclusion period.
Top Reasons for not Buying Life Insurance
Nearly half of the US population has nil or insufficient life coverage. Here are some common reasons why:
- People feel there’s no need to cover themselves at the current stage of their life
- Uncertainty as to which insurer to use
- Confusion as to how it works
- Not being bothered
- Being afraid of the exam
- Postponing the necessity
- Not knowing how much to insure for
Having no life insurance is a risk. Whilst proceeds may not benefit the insured directly, the purpose is to buy peace of mind; knowing that your spouse and/or children or even your dependent parents can continue their current lifestyle if the unfortunate happens.
Some people are deemed uninsurable if they are considered too high a risk to the insurer. Carriers are particular in what coverage they will offer, to whom and for what period. For example, term policies become very expensive for seniors after the age of 60 and are virtually unattainable after 95. Pensioners are often left with limited life insurance options such as burial end of life costs or other form of inexpensive life insurance for seniors.
Companies base their profitability on mortality tables and risk assessment, called underwriting. This is an investigation which usually involves a medical exam. There are policies with no life insurance exam, however they are usually more expensive and contain wider exclusions. Insurers won’t cover people who run certain high risk lifestyles or those with a terminal illness at the time of application. Sometimes, workers can be left with limited or no life insurance for dangerous occupations.
Once you apply for a policy and have been accepted for coverage, your family may still end up with no benefits. This can happen if you have lied or misrepresented facts on your application form or during the underwriting process. Even if you have to pay higher premiums due to your health condition, there is no use in lying. Misrepresenting the facts will void a payout.
You can also end up without coverage if your policy doesn’t cover you for the circumstances which actually eventuate. For example if you only purchase accidental death insurance, you will not be covered if you are murdered or if you die from an illness. There have been many cases with no life insurance payout.
Sometimes you may think you have coverage, only to find out a technical exclusion applies which entitles the insurer not to pay out any funds. Such was the case for John Crowley, whose wife died from breast cancer which she unknowingly had at the time of application; although the insurer did end up settling the claim out of their good will.
However, the recent Vinson case is making consumers nervous. The insurer denied the wife’s claim to Mr Vinson’s accidental death benefits on the basis that he was intoxicated at the time the accident occurred in his kitchen.
There is much confusion about cases where there is no life insurance beneficiary. Rest assured that insurers cannot deny benefits where a beneficiary has not been named or where they have predeceased the decedent.
If you have been denied life insurance benefits, contact your attorney to assess the circumstances.
What happens if I have no Life Insurance?
Not having sufficient coverage can cause dreadful and unintended consequences for dependents such as a spouse and children (especially for a single parent with no life insurance). This is particularly so if a family breadwinner passes away prematurely, leaving a mortgage, an unemployed spouse and dependent children.
The stay-at-home mom or dad will need to keep up with rental or mortgage payments whilst looking for a job. This will prove difficult if they have no financial assistance for childcare. These situations where no or insufficient life insurance has been left inevitably result in the surviving spouse being forced to sell the family home in order to survive.
To avoid hardship in the event of your death, you should not only buy a policy, you also need to ask yourself “How much life insurance do I need?”.
On the other hand, if you don’t have any dependents, you may not need to insure at all.
In any event, you should answer these questions for yourself: If I die or fall critically or terminally ill:
- how can I afford health and hospital costs?
- who will pay for my funeral expenses and cemetery costs?
- who will pay attorney fees to settle my estate?
- will my spouse cope with the annual living and household expenses?
- who will support my dependents (children, spouse, parents)?
- what about child-care?
- how will my children afford schooling or college?
- how will my spouse pay rental or mortgage payments?
- will my spouse be forced to sell the family home?
I have no life insurance, what should I do?
The first step is to research your options and buy a policy. Term policies are generally the best value in terms of amount of coverage per dollar. If you can’t afford much, you can even look into buying no load life insurance in order to save. Ensure to read the terms and conditions carefully and make sure you’re aware of all applicable exclusions.
Do thorough research. Don’t just take advice from one single source. There is lots of bogus information and advice that can be found on the Internet. For example, despite much persuasion, there is no life insurance for pets.
You need to be cautious and plan carefully.
There are many factors to consider when purchasing any product. Salespersons try to make the decision easy for you but often their methods are too simplistic to take account of all your and your family’s needs.
Whether you have no coverage or you just want to reassess your situation, you should always consult a qualified and independent financial advisor. They will be able to advise which policy best suits your circumstances and whether you can make life insurance deductions. Consulting a financial advisor is the safest way to make sure you obtain adequate and appropriate life coverage.
Find out more about the different types of policies:
- Term Life Insurance – The most common form. The policy owner buys an agreed amount of benefit (a face amount that does not accumulate cash value) for a specified length of time (the term) at an agreed premium.
- Whole Life Insurance – The original cash value policy which enables you to invest part of your premium.
- Variable Life Insurance – Gives you the ability to manage your investments, a guaranteed minimum death benefit and fixed premiums.
- Universal Life Insurance – Flexible premiums and face value, but no investment control.
- Variable Universal Life Insurance – A combination of variable and universal, this policy allows you flexibility with premiums, face value and control over investments.
To make it even easier for you, we have developed a simple comparison table for comparing your options.