Anyone living in modern American society is likely very familiar with the concept of insurance. When we stop to think about it, it seems that insurance plays a role in almost every aspect of our lives. We routinely insure our cars, our health, our homes, and our lives. However, many of us have also learned the hard way that insurance can be complicated. We have previously discussed at length the complexities of automobile insurance in Oregon. Similarly, life and other forms of insurance have complexities. Policies may contain defined terms, conditions, exclusions, and other contractual provisions which affect coverage. In this article, we will discuss life insurance and whether it is affected by a wrongful death lawsuit.
How Life Insurance Works
Certainly, most people understand the basics of life insurance. The policy holder pays a premium to the insurance company. If he or she dies during the policy term, the insurance proceeds are paid to the insured’s beneficiaries. There are several common types of life insurance, two of which are discussed below.
Whole Life Insurance – Whole Life Insurance covers an insured for as long as he or she continues to pay the premium. There is no pre-specified short-term date range of coverage, such as one sees with home or automobile insurance. Whole Life insurance also accumulates a portion of the premium, often called the “cash value,” which ultimately belongs to the insured.
Term Insurance – Term insurance is a pure form of insurance, which, when purchased, covers a specified term (date range). If the insured does not die, there is no cash value and the insured does not receive any money from the insurance company. For this reason, term insurance is generally less expensive than whole life insurance.
Common Exclusions in Life Insurance Policies
Remember, a life insurance policy is a contract. The contract provides that the insurance company agrees to pay agreed-upon proceeds upon the death of the insured. However, insurance policies also contain exclusions. These exclusions set forth circumstances under which the insurance company is not required to pay. One should carefully review the insurance policy to be aware of these exclusions. Below, we will take a look at a few common exclusions.
Suicide – this exclusion provides that the insurer does not have to pay in the event that the insured commits suicide. The clause is often limited to the first two years of the policy. The clause is designed to eliminate the possibility that one who intends to commit suicide first purchases a life insurance policy.
War – some policies specifically exclude death at war. Thus, the policy would not pay in the event the insured dies in a war.
Hazardous Activities – many policies provide that if the insured’s death results from a certain hazardous activity (which is named), the policy will not pay. The specific activities deemed hazardous can vary from policy to policy. Examples of activities classified as hazardous in some policies include the following:
- Sky diving
- Hang gliding
- Motorcycle racing
- Scuba diving
- Aviation (this doesn’t apply to commercial flights)
Wrongful Death and Life Insurance
As we have previously discussed in this blog, wrongful death occurs in Oregon when one person wrongfully causes the death of another person. So, if a person dies and a wrongful death lawsuit is filed, is the deceased’s life insurance policy affected? The answer is “no” – the filing of the lawsuit in no way affects the viability of a life insurance policy. Thus, the life insurance beneficiary would generally be entitled to recover.
However, one of the exclusions discussed above could potentially affect the life insurance coverage. For example, assume the deceased was a passenger in a small private plane that crashed due to another person’s piloting error. If the passenger’s life insurance policy has an aviation exclusion, the policy may not have to pay. However, a wrongful death action could be pursued against the pilot.
Call with Questions
If you have questions about wrongful death, insurance, or how they work together, please contact us for a free consultation. Our experienced lawyers understand these complexities, and can help you hold those accountable who have not lived up to the standards that society demands.
Oregon Department of Consumer and Business Services – State insurance information – http://dfr.oregon.gov/Pages/index.aspx
Oregon Revised Statutes – Life and Health Insurance – https://www.oregonlaws.org/ors/chapter/743
Action for Wrongful Death – Oregon Revised Statutes: https://www.oregonlaws.org/ors/30.020