If a life insurer is contesting your life insurance claim, find out if the policy is under two years old. The insurer has the legal right to check for misrepresentations within the contestability period which is within the first two years of a policy.
For example, someone dies of cancer and nothing showed up in his physical though an autopsy shows that a tumor had been present for 5 years. This person never saw a doctor for treatment so it is likely that he or she did not know about the cancer. The insurer would generally pay the claim.
However, if this same person was diagnosed with cancer, had seen a doctor, went through tests and purchased a policy immediately to take care of his needs but lied on the application that he was in good health, the claim would be denied.
According to the International Risk Management Institute, Inc. a life insurance policy has a suicide clause which is designed to prevent people who are contemplating taking their own lives from obtaining benefits within a specific time period. However, this can vary depending on the state you live in and other regulations. After the period has expired, the life insurance company must pay a suicide claim. Prior to all of this, underwriters try to carefully determine if there are risks during the application process through the applicants medical history.
Insurance companies must be efficient when evaluating the initial application. The underwriting process can be complicated, taking in all information, exams, health reports, classifying and rating the individuals risk for medical problems and estimating longevity. It is so important for the consumer to be honest in the long run.
As the IRMI comments, determining the economic value of a human life is not easy, but life insurance companies must come up with a figure that represents that value.