What happens if I take out life insurance and unexpectedly die the next day?

Photo by Scott Graham on Unsplash

I am a firm believer in life insurance. I know may people have been burned and think its a scam, but it can be a very valuable tool in your financial portfolio.

First of all, insurance is a contract that pays out in the event of loss. Life insurance is an agreement whereby an amount is paid to named beneficiaries in the event of someone’s (the insured) death. The amount can be used for any purpose — to clear debts, for funeral expenses, to provide for surviving dependents, etc.

Now, a big challenge that people have in their experiences with insurance policies is that when they go to make a claim, things do not go smoothly. Once an insurance policy exists, and beneficiaries are aware, the expectation of payment arises once the insured dies. However, each policy comes wit terms and conditions which dictate when a payout will occur. These terms and conditions will vary across policy types, companies and countries. The terms may differ within the states or parishes of a country. This is why reading and understanding the terms of your specific insurance is important.

Things can get tricky in the case where an insured person dies the day(s) after a policy is opened. Policies are generally in-force and active once the first premium is paid. However, some policies may have…