Life Insurance and Overdoses

Massachusetts is one of the top ten states with the highest rates of opioid overdose deaths. While intervention has led to a recent downward trend in overdoses, they still occur at a much higher rate than 5 years ago. The opioid crisis has reached into every corner of society, catching family members and friends off guard. Some find themselves in additional peril when their life insurance claims are denied due to cause of death. This is new territory for insurance carriers, and the outcomes rely on a number of factors. If this happened to your family, would you be prepared?

Intentional vs. Unintentional Overdoses

Certain types of death are excluded from coverage under life insurance policies, and those exclusions differ from policy to policy and carrier to carrier. For example, many policies do not pay out in the event of a suicide. When it comes to a drug- or alcohol-related death, insurance companies will investigate whether the death was self-inflicted or accidental. Fatal overdose caused by illegal drugs, though it may be unintentional, is considered self-inflicted and therefore not accidental.

In addition to the use of illicit drugs, a life insurance claim would also likely be denied if the death resulted from:

• taking medications prescribed to someone else
• taking your own medication, but taking it not as prescribed
• being intoxicated above the state’s legal limit

There’s a gray area for insurance companies: when the deceased overdosed while taking narcotics under a physician’s orders. Could the patient have accidentally taken too much? Did the doctor prescribe the medication correctly? Was there an interaction between the narcotic and another medication? The insurance company will look at all the evidence, such as the coroner’s report, medical history, substance abuse history, and so on, to determine whether the death meets the policy’s requirements for accidental death.

Other Factors

Not surprisingly, insurance companies do not want to pay out death benefits for those who abuse drugs or alcohol. To that end, they expect insurance polices to mature for two years before paying out claims (and not just for overdoses). Any life insurance claim that occurs within the first two years of the policy is contestable and more likely to be denied. This is to prevent fraud, so someone doesn’t get an insurance policy and then immediately stage an accident to leave their family a financial windfall.

Insurance companies will also want to know if the insured was honest on their application. If the insurer uncovers that the decedent had lied about his history with substance abuse, they may deny the life insurance claim. This is true even if the cause of death had nothing to do with drugs or alcohol. It’s considered material misrepresentation, and even a small, seemingly-inconsequential lie gives the insurance company standing to deny a claim.

If you have a history of substance abuse, it may be more difficult to get life insurance, but it’s not impossible. The best course of action is to be completely honest. You will get a lot of questions, and you may have to show that you’ve been sober for several years in order to qualify. If you are presently using illicit drugs, however, you will be denied.

Review Your Policy

For many, life insurance is meant to be a safety net for loved ones in the event of an untimely death. Without you realizing it, your behavior could be cutting holes in that net and leaving your family vulnerable. If you would like to review your current life insurance policy or discuss a new one, call Banas & Fickert Insurance Agency at 413-527-2700.