If you are the victim of a politically motivated attack, a common clause in life insurance policies could delay or deny your benefits.
Until 9/11, most Americans did not pay close attention to act of war" clauses in their life insurance policies. These clauses deny death benefits in the event of an insureds death due to an act of war. Living in the United States pre-9/11, most Americans felt a great sense of safety and security, and there was no reason to be concerned about anything war-related occurring on U.S. soil.
After the World Trade Center attacks, however, and with the recent London bombings, the realization that our world has changed is evident. Suddenly our safety and security could be at risk, and the act of war clauses that were not given a second thought five years ago, have taken on a whole new meaning.
But what is an act of war? Ask around and you'll find that you will not get a definitive answer. The term can be very difficult to define, especially for large insurance companies.
For this reason the act of war clauses frequently found in life insurance contracts are commonly difficult to interpret. The best way to ensure that benefits will not be denied due an event that can be construed as an act of war is to purchase a policy that contains no such clause. By removing the clause you eliminate the need for its interpretation and alleviate the possibility that your benefits will be denied.
What about Americans killed overseas and the London bombing victims? Will their benefits be paid? We called the home offices of large life insurance companies with these questions. We received unclear answers, were redirected to several different departments, and ultimately wound up in their legal departments.
What we were told, off the record, is that rather than face the skepticism and uproar that would obviously occur if they refused such benefits, they would most likely pay the death benefits. However, they made it clear that they were really not sure. When asked if they would pay benefits only to clients involved in high-profile events like 9/11 or the recent London bombings, they again gave no official answer. It was clear that only their Board of Directors and corporate attorneys (who were not available to speak with us) could provide these answers.
Guy Cardinale, CEO of Complete Life Quote, Inc., told us what he believes is the best way to deal with act of war clauses. "The best advice I can give to anyone who is concerned about this clause and currently has life insurance is to check their policy and make sure there is no act of war clause. If there is, you may want to look into it thoroughly and rethink your choice. Again, it's very important to check ... and getting definitive information about it from your insurance company is often times very difficult."
We found a long-time New York resident who has worked on the stock exchange for 22 years that changed life insurance companies after realizing his policy contained an act of war clause. As a witness to the 9/11 attacks, he felt the stock exchange could be the next target. He told us, "Working in the financial industry makes me realize that [life insurance] companies make decisions to protect themselves financially, whether moral or not. In order to protect my family I did not want to take any chances on my life insurance company finding any reason not to pay. After the World Trade Center attacks...I made the decision to change to a new policy that had no act of war exclusion." Ed now has a life insurance policy that will promptly pay his benefits in the event of his death due to an act of war.
Very simply put, if a policy contains and act of war clause and the insureds death is due to circumstances that could remotely resemble an act of war, a battle could ensue with your insurance company. Benefits could be delayed or denied, and the likelihood of this happening is greater if the death occurs outside the United States. The only way to avoid this is with a policy that does not contain the clause.
Millions of Americans have no life insurance, and millions more own policies that contain act of war exclusions. Our research found a handful of Internet companies that specialize in term life insurance policies without act of war exclusions, including Complete Life Quote, Inc. You can find more information about them and about life insurance in general at www.CompleteLifeQuote.com.
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