What Does Life Insurance Cover In 2022?

By Sa El Published:

Life insurance policies can be difficult to navigate, but it’s important to understand the details to find the right policies and protect your loved ones’ financial future.

There’s a lot to sort through, like premiums, coverage amounts, and optional riders.

what does life insurance cover

So, what does life insurance cover in 2022, and how does life insurance work? We take a closer look at the details you need to know in this article.

What Does Life Insurance Cover?

When answering the question, “what does life insurance cover?” The first thing to consider is your cause of death. Your cause of death will factor into whether or not your policy will payout.

Thankfully, standard life insurance policies cover just about every cause of death, including:

Death by Terminal Illness

Terminal illness is an incurable illness and generally expected to lead to the patient’s death.

Some common examples of terminal illnesses include the following: 

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The final insurance policy premium for any policy is determined by the underwriting insurance company following the application.

Cancer, progressive heart disease, ALS (Lou Gehrig's disease), Alzheimer's (and other forms of dementia), liver disease, and multiple sclerosis.

Death by Critical Illness

A critical illness is a specific and serious medical episode, illness, or disease.

Some common examples of critical illnesses include certain cancers, stroke, heart attack, kidney failure, Parkinson’s Disease, end-stage liver failure, and end-stage lung disease.

Death by Chronic Illness

Chronic illnesses are diseases and conditions that last for at least a year and require routine medical attention.

Examples of chronic illnesses include HIV/AIDS, diabetes, cystic fibrosis, and Crohn’s disease.

Death from Accident

If you’re involved in an accident and die as a result of the accident, your insurance policy will pay the full benefit amount.

Scenarios here include automobile accidents, pedestrian accidents, workplace accidents, and murder.

Optional Riders

Riders are optional additions you can add to your life insurance policy that will expand your coverage to include additional expenses not included in the base policy.

These will vary between insurance companies, but some common riders include:

Each rider will add additional benefits to your policy, some that payout while you are still alive and other that take effect once you pass away.


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What Does Life Insurance Not Cover?

As you can see, life insurance covers a broad range of death causes. However, there are some exceptions, including:

Suicide (Until after two years)

If you commit suicide within the first two years of obtaining your policy, the insurance company most likely will not pay out your full benefit amount.

Many companies have this regulation in place for the first two years of a policy to protect themselves and discourage suicide for financial gain.

Clauses regarding suicide vary between insurance policies, so read yours to understand your coverage for this event.

Death While Committing a Crime

If you die while participating in illegal activity, your insurance policy will not payout.

Such activities include a range of crimes from illegal street racing to drug trade, police chases, and more.

What Things Can You Use a Life Insurance Payout On?

Your beneficiary can use the benefit amount to cover any expenses. There are no restrictions regarding how the money is spent once the funds are released.

Typically, beneficiaries use the payout to cover things like:

  • Final expenses: Medical bills and funeral arrangements add up fast, and life insurance benefits can cover these costs.
  • Outstanding debts: Creditors do not forgive your debts when you die, so mortgages, car loans, and credit cards will need to be paid off by your loved ones (if they are legally responsible). Using the benefits from a life insurance policy helps to prevent these debts from impacting your loved ones.
  • Housing: Many people ask, “what does life insurance cover on a mortgage?” The simple answer is that your beneficiaries can use the payout to cover monthly mortgage payments or rent after you pass away.
  • Cost of living: You probably have a list of regular expenses you pay in addition to your housing, utilities, internet, and food, among other things. When you die, your loved ones will still need to pay these ongoing expenses, which can be particularly difficult if you’re the primary breadwinner.
  • Childcare: If you have or are planning to have children, your life insurance can cover costs like daycare, summer camps, before or after-school programs, and tutors. It can also cover the cost of education at private grade schools and college.
  • Dependent care: If you’re the caregiver for an aging grandparent, parent, or person with disabilities, your benefit can cover the cost of their ongoing care. This list is far from exhaustive; it’s just an idea of what the funds might cover. Your beneficiary is free to spend or save the money however they want.


Life insurance by state.

When Does a Life Insurance Policy Pay Out?

Life insurance policies pay the covered amount after you die. Your beneficiary will need to obtain a certified copy of your death certificate and submit it along with the claim to the insurance company.

Laws vary from state to state, but insurance companies generally have 30 days to review the claim and distribute funds to your beneficiaries.

things covered by life insurance

Does Your Life Insurance Payout Stay the Same No Matter When You Die?

Term life insurance policies are valid for a set period.

What is term life insurance?

It’s a policy that’s valid for a defined number of years. If you die within the term, your payout will stay the same no matter if you die in two years or the final year.

Once your term is over, the policy is considered expired, and your beneficiary won’t receive any funds from the policy.

How Much Coverage Should I Get?

Life insurance policy amounts vary significantly, and the amount you need depends on your financial situation and the needs of your loved ones in the years to come.

If you’re the primary breadwinner and have three young children to protect, you’ll need a larger policy than you would as a single person who only needs a policy that covers their final expenses.

While I usually recommend a policy that is 10 to 15 times your annual salary, it’s important to review your individual needs carefully.

You should also review your policy regularly and update it after any major life events.


Life Insurance made easy.

Agents not required.

Get quotes and sign up online without talking to an agent. But, we are here if you need us. 

Unbiased, expert advice.

Get unbiased insurance education from licensed experts and also avoid dodgy sales calls.

Coverage in minutes.

You can get life insurance coverage within minutes of getting your quotes and applying.

Taking Action

Life insurance policies are a key part of protecting your loved ones after you pass away.

Your beneficiaries can use the payout to cover important expenses like funeral costs, debts, daily living, expenses, and more.

If you don’t have life insurance you are taking a huge risk if anyone depends on you.  Don’t wait and click here to get things started.

Sa El

About the author

Sa El is the Co-Founder of Simply Insurance and a licensed Insurance Agent with over 13 years of experience in the industry.  He specializes in Life & Health Insurance and is certified in Long Term Care Insurance in the state of Georgia. a licensed real estate agent in the state of Georgia (License #382602), an entrepreneur, insurance educator, and freelance writer.

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