Life insurance policy has emerged as a key financial safety net in recent years. It not just helps in financial planning but also helps ensure one’s loved members have a secured financial future even in their absence. However, many individuals tend to limit their research on life insurance policies to just the features and benefits and end up unaware of the claim exclusions on their choice of plan.
This prevents them from making an informed decision regarding their choice of insurance plan. Additionally, such exclusions may emerge as a potential hindrance for their beneficiary when they try to raise a claim under the policy plan, all because the policy buyer skipped checking the life insurance policy exclusions.
To help you prevent such an unpleasant situation, we have discussed a few crucial exclusions that accompany life insurance policies.
Read along to know more about what is insurance and accompanying exclusions.
What are Life insurance Policy Exclusions?
Besides knowing about what is life insurance policy it is also crucial that you know what is the claim exclusions often come with.
Typically, life insurance policy exclusions are situations that prevent beneficiaries from receiving the death benefit of the policy. In other words, they are the causes of death or accident that are not covered by the life insurance policy.
Notably, life insurance policy providers can decide which exclusions will be included under a policy plan. Typically, life insurance policy exclusions are listed clearly on websites or documents, making them accessible to individuals.
The primary reason why insurance providers lay down exclusions is solely to protect themselves from the risk of paying for death arising from every situation. If they give the nod for every situation, it will weigh down on their financial situation and hamper their solvency.
That said here are some of the most common life insurance exclusions of the policy including death caused by these:
- Suicide
If the cause of death of the policyholder is suicide, the beneficiary’s claim is most likely to get rejected. Typically, the suicide clause is a two-year period in most life insurance policies and is defined in the terms. In case the policyholder commits suicide during the clause period, the policy provider may pay the premium amount but not the death benefit.
Some insurance companies screen the mental health of intending policy buyers to prevent those diagnosed with an illness from buying a policy. Alternatively, they may charge such individuals a higher premium for the coverage.
- Acts of war or military service
A policy cover would be denied to the beneficiary if the policyholder loses their life in the act of war. potential. Military service may also put a policyholder at a higher risk to insure, making it a potential exclusion.
- Aviation accident
Death caused due to aviation accidents is also a common exclusion in life insurance exclusions.
- Maternity-related incidents
Deaths caused due to complications during pregnancy are not covered by life insurance policies.
- Natural disasters
Life insurance companies typically do not cover natural disasters such as earthquake, tsunami, hurricanes, and flood. If a policyholder dies during a natural disaster the policy provider will not approve the payment of death benefit to the beneficiary. However, individuals who reside in disaster-prone areas may check out with leading life insurance companies if they extend riders for natural calamities and add it to their existing life insurance policy.
- Pre-existing health conditions and STDs
Most life insurance companies do not entertain claims arising from pre-existing health conditions. They only tend to cover critical illnesses that arise after one has obtained a life insurance policy. Similarly, death from sexually transmitted diseases such as AIDS, HIV, etc. are also excluded from policies.
- Accidental death
Accidental death policies which extend coverage for death caused due to an accident often don’t cover death related to any chronic health conditions or illness. Such policies tend to define what constitutes an accident and what doesn’t. Often they include exclusions such as death from:
- Illegal activity
- Substance abuse
- Risky behavior
Notably, each exclusion is broadly defined by top insurance policy providers like Max Life Insurance and may vary among the insurance companies. This is why it is crucial to read the exclusions set in place by different insurance companies while comparing their features and coverage.
It is important that you are transparent about your health conditions, and mental health issues while availing a life insurance policy and don’t misrepresent the same. This is because the policy provider finds about the same during claim verification the same could be rejected and the beneficiary could end up with no death benefit or premium amount, whatsoever.
Such a turn of events would defeat the purpose of having life insurance and jeopardize the financial future of one’s loved ones.
How to know if there are exclusions on your life insurance plan?
The best way to know about the exclusions accompanying a life insurance policy is to read the contract. Every leading insurance company like Max Life Insurance lays down the exclusions of insurance policies clearly in the contract.
In case you find it challenging to understand the extent of such exclusions or more, it is recommended to seek the assistance of an insurance agent. This will help you break down the nitty-gritty of the insurance plan and understand if the exclusions would weigh down the merit of having a certain life insurance policy.
The rule of thumb should be that the concerns that pushed you to get a life insurance plan are not part of the exclusions. Always look for policies that cover your concerns and pick a plan that comes with minimal exclusions.
Besides these reasons such as providing incorrect information can get a life insurance policy claim get rejected. Hence make sure to read the exclusions and provide correct information to avoid the risk of the claim getting rejected. Above all, every insurance company is different from another and that is why their contracts would differ too. This gives room for better comparison and allows individuals to pick an insurance policy that is best suited for their requirements.
