True Or False? Exposing 4 Myths About Insurance

Insurance can be a complex state of affairs, particularly when one considers how different policies are treated from country to country, or even from state to state in the case of the US. Consequently, in every separate part of the industry many semi-truths, half-truths, and downright lies have emerged over the years. So I thought it might be fun, and informative, to expose some of the more intriguing assumptions out there.

1. A claim will not be paid after an 'Act of God'.
Many insurance specialists (in the UK, at least) will claim that the term: 'Act of God' does not really exist in a professional sense. Despite this, the term has come to be a reference to when a freak storm or other occurrence that could never have been anticipated by an insurer is the reason for a claim, and the insurer refuses to pay out. The phrase does actually seem to have stemmed from US specialist insurance, such as flood, maritime, and crop insurance - and seems dated to many, primarily because a typical valid insurance policy should cover for what it says it will cover for - and won't cover what it doesn't. This is regardless of whether 'God' had a hand in the policyholder's misfortune.

2. A life insurance claim will not be paid if you commit suicide.
It is usual to assume that a life insurance will not pay out if the insured commits suicide. This is because many policies have a suicide clause that might be in effect for just one or two years, or for the entire duration of the policy. However, if a claim is rejected suicide is usually not the reason. The exact reason for being denied the payout will most likely stem from the insurer receiving insufficient information as to the medical and psychological state of the insured at the outset.

3. Insurance is void during acts of terrorism and war.
Again, this is a complex presumption because terrorism and war do not fall under the same umbrella in certain areas. Typically, insurers regard wars and warzones as being very difficult to calculate in risk terms - usually resulting in an outright refusal to pay out to any insured individual who enters one. That said, terrorism can feasibly occur anywhere in insurance terms, resulting in some policies choosing to include it in their cover, and others not to.

4. Using a different name on a second-home policy will void it.
The UK Politicians Expenses Scandal has recently brought to light a number of other myths concerning insurance, and thanks to allegations against MP Andrew George it is now common knowledge that the above is in fact true. Actually, such actions are considered fraudulent and the correct term for giving an incorrect name in this manner is:'fronting'.

For more information on Life Insurance please go and have a look at http://www.confused.com/life-insurance