CLHIA-ACCAP - Consumer Information

A guide to life insurance

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35 WHAT IT'S ALL ABOUT: PAYMENT OF THE CLAIM Individual policies normally contain a two-year suicide clause. If death is due to suicide and occurs within two years of taking out the policy, the claim is not paid. If a suicide occurs after the two-year period, the claim is paid. Group insurance plans pay for suicide deaths. Creditors insurance may not. Your policy may also contain clauses that exclude claims or limit coverage for other reasons, for example, where death results from an act of war or from terrorism. What exclusions might apply? Yes. This is stated in the policy and normally ranges from 90 days to 12 months. Claims filed after that may be considered, depending on the circumstances and the insurer's ability to confirm the coverage. Is there a time limit to file a claim? Yes. Most companies pay interest from the date of death. The rate of interest is consistent with the rate of interest paid on policy proceeds left on deposit with the company. This interest is taxable. Is interest paid on a claim? Most beneficiaries choose to receive the life insurance proceeds in a lump sum. But depending on the contract, there may be other settlement options available. These include taking the money as a life income in regular payments, or leaving the money on deposit with the company and collecting the interest. How are the benefits paid? As a rule, the death benefit of a life insurance policy is not taxable. Are the benefits taxable?

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