In 2017, over 70,000 Americans died from a drug overdose. This crisis has claimed an average of 130 lives per day (in the US alone). This begs the question of how life insurance policies handle such cases and what the beneficiaries can expect from insurance companies.
Does Life Insurance Coverage Include Drug Overdose?
With such an occurrence in the case, what do life insurance companies think about drug overdose? Is it covered in life insurance policies? And if no, what factors do they take into account?
There are some cases wherein drug overdose is covered by life insurance, but not always.
There are factors that insurance companies look into to determine if the insurance company will pay the death benefit for a drug overdose.
The first factor is the type of drug that the insured had overdosed on. The next factor is whether or not the policyholder was honest about their drug use upon the time of application.
In some cases, the insurance company will also investigate if the drug overdose was accidental or intentional.
Most insurance companies will have a two-year contestability period wherein they can conduct an investigation on the case. They use this opportunity to assess the cause of death and if it breached the guidelines of the policy.
There was a time when insurance companies excluded people with risky behaviors from getting insurance coverage. But over the years, insurance companies have become less stringent with them, provided that the insured individual discloses that information to them.
In the event that the policyholder is not forthright with this type of information, the insurance company owns the right to deny the life insurance claim. The contestability period gives insurance companies time to investigate if the death will be covered by their policy.
The insurance provider can dispute any claim (depending on evidence gathered), especially if the insured individual provides them with incorrect information.
Drug use is definitely a risky behavior. With the risk of a drug overdose, an insurance company may or may not pay the death benefit.
What are the Grounds to Deny Claim for Drug Overdose?
The primary reason for a life insurance claim to be denied is if the insurance provider has determined it was intentional (suicide). In this case, they will refuse to pay the death insurance claim to the beneficiary. This is very common when the life insurance policy was recently purchased prior to the death of the insured individual.
Cases wherein the drug overdose happens right after the policy was purchased are closely examined for this very reason. Some would intentionally take their own lives to secure a better financial future for their family – sad as it sounds.
But if the insurance company has determined that the drug overdose was unintentional, more investigation will have to be done. This is a tricky situation that insurance providers face.
As mentioned above, drug use is risky behavior. While the overdose of drugs is unintentional, the user is aware of the risk for its use. There is also a high chance that an individual who overdosed on drugs is not using it for the first time.
History of drug use is something that insurance companies require policy owners to be upfront with during application. If the insurance policyholder does not disclose this information to them upon the purchase of the policy, there is already a huge discrepancy. Did the person recently used drugs or is it a recurring behavior?
Accidental overdose is not considered part of the suicide clause. However, they are still subject to the contestability period. The decision will depend on the information gathered during the investigation.
In short, a lengthy investigation is needed to obtain all the information linked to these cases before a final decision can be made. With so many factors to take into account, it is not a yes-or-no decision for insurance companies. In some cases, they might pay only a percentage of the death benefit claim, or issue a refund for the premiums paid.
Is the Drug Illegal or Prescription?
One of the things that insurance companies would investigate is the type of drug that the insured overdosed on. They typically fall under one of two categories: illegal or prescription.
Will life insurance pay if the death was due to overdose? If it was any type of illicit or illegal drugs, such as meth, cocaine, or heroin, the answer is most likely not. Insurance companies will not pay for this case because the insured individual is aware of the dangers of these drugs. While the cause of death was accidental, the individual’s awareness of its inherent risks can cause the claim to be denied.
On the flip side, there are certain types of drugs that are prescribed by a licensed physician. When there is an overdose on these drugs, they are deemed accidental. If no other factors could be attributed to the death, apart from the prescribed drug, then it would be ruled out accidental. In this case, the insurance company will pay the death benefit to the insured individual’s family.
Other Exclusions from Life Insurance Coverage
There are a few other exclusions to a typical life insurance policy, aside from death that automatically results from a drug overdose.
The first exclusion when it comes to life insurance policies would be accidental death resulting from the intake of prescribed drugs.
The exclusion applies when 1) the drug was not prescribed to the individual, or 2) it was not taken based on the prescription orders (such as a higher dose than prescribed). Even if the individual was taking prescription drugs, further investigation will still be pursued by the insurance provider.
Another common exclusion to life insurance coverage relating to drug use is if the person incurs injury or death because of it. For example, if the person is driving a motorized vehicle following drug use and sustained collision or accident that eventually results in death.
In this case, an investigation will be conducted to determine the amount of drugs in their bloodstream by the time of the accident and death. Based on that information, the insurance company will conduct further investigation and will deny the death claim if determined that drug use was the primary reason for the vehicular collision.
Depending on your contract or the policy guidelines, the insurance company may or may not be able to request a toxicology report or an autopsy. If the insured individual has disclosed drug use by the time of the application, the insurance company has the right to request an autopsy or toxicology report.
If there is no history of drug abuse, the details of the contract must be looked more closely into if this is possible. Some, but not all, insurance companies are able to order these tests at their discretion (and depending on the details of each case).
How to Qualify for Life Insurance Even with Drug Use (Current or Past)?
Due to the prevalence of drug overdose deaths with life insurance claims, most insurance companies will now require a drug test during application. Other tests that might be required include blood and urine tests.
Most insurance providers will deny an application for anyone using illicit drugs (with some exceptions for marijuana). But if you disclose your use of marijuana, some insurance companies will charge a higher insurance premium (or if your test came out positive for THC). Aside from this, there are a few other lifestyle factors that can cause your insurance premium to hike.
The policies on qualification and insurance rates vary from one insurance provider to another. It pays to shop around if you want life insurance coverage even with drug use (current or past).
What to Do if the Claim was Denied?
All is not lost when a life insurance claim was denied by the insurance provider. While insurance companies pay their due diligence in investigating the cause and circumstances surrounding the death of an insured individual, there are far too many blurred areas in this regard.
Everything is still up for evaluation and how the insurance company uses information obtained from their investigation is based on their own discretion.
If beneficiaries feel that they had been denied unfairly on the life insurance claim, you can take legal recourse. You can hire an attorney to pursue the case legally. This could get expensive but if you feel like the drug overdose was accidental and was wrongfully denied, then it is worth hiring an attorney to reach a settlement.
In some cases, insurance companies would be willing to reach a settlement with the beneficiaries rather than being dragged through the court. On the other hand, if the insurance company stands to lose more by paying then they will fight it out in court.
Beneficiaries must honestly assess the case to determine if they have a right to pursue the claim legally. Otherwise, you could lose more money than you could gain from the case.
It is not a bad idea to consult an attorney first to review the details of the insurance policy. They can also provide legal advice on whether or not you have a right to the claim.
Drug overdose is becoming more common these days, however unfortunate that is. Intentional overdose, use of illicit drugs, and dishonesty during application are three main factors that will cause one’s claim for life insurance to be denied. If the claim is denied, the family of the insured individual can seek the help of an attorney to appeal the insurance company’s decision.