Life Insurance Policy: Know Your Exclusions Well

An insurance company is liable to pay the policyholder the sum assured if and when an insured event occurs during the contract’s term. The companies put in exclusions to minimize losses.  An exclusion an be defined as a cause of death that releases the insurance company from the liability to pay the death benefit to the beneficiary of the insured person.

One often forgets to read the exclusions thoroughly all the while being enamoured by the benefits. But it is a severe mistake. Exclusions are clearly stated in the Insurance Policies as also the riders that come with the terms of exclusions.

 

Following are the few exclusions that are pretty much common to all Insurance Policies:

Death In The Event Of Suicide :

Suicideis a common exclusion across insurance plans by all companies. The medical expert determines the cause of death, issues a death certificate whereby the ultimate decision to rule the death as a suicide only rests on the court. The insurance company conducts its own investigation and in case of death, the claim is denied whether the life insured is sane or insane. Often the exclusion period varies from one company to the other and the company might return the premium but not pay the death benefit.
Almost no insurance company would pay the sum assured if death occurs within 1st year of the policy term.

Accidental Death Benefit Rider:

In case of any kind of accidental death, the company carries out an investigation via its own medical experts. All death claims are thoroughly investigated and claim decided thereafter. Following are the instances of Critical Illness or Accidental Death Benefit, where sum assured is denied :

• Dangerous activities like Scuba Diving, Racing, Rock Climbing and involved in professions like Aviation, Military, etc. 

• Acts that are criminal in nature

• Death during childbirth or from complications that arise from it.

• In case of death owing to a pre-existing illness.

Death due toLifestyle Diseases :

In case of death from lifestyle diseases arising due to addictions such as Smoking, Drinking Drugs etc, a claim is denied on grounds of concealing information from the insurer. For example, Smokers are charged higher premiums due to being categorized as higher risk.This is because they are prone to succumb to lifestyle diseases earlier than others. The same accounts to chronic alcoholics.


Though insurance companies typically ask in detail about risks and lifestyle disease probabilities, it is important to make one’s own thorough research else one stands the chance to lose its claim if the death be under dubious circumstances.

It’s crucial to read the fine print while buying a Life Insurance Policy because one such tiny rider may cause the claim to be denied. One must go for a policy that has minimum riders and is detailed in the form. More than the benefits, it is the exclusions that are important.