Life insurance is essentially a contract between two parties – the life insurer and the life assured – in which the former offers life coverage to the latter for a fee known as premiums. If the life insured unfortunately passes away during the policy tenure, their nominee or beneficiary is entitled to receive the sum assured payout. However, life insurance is a business, and profits and losses can make or break a corporation. In order to limit their losses, every insurer has established a list of exclusions, which are essentially events/circumstances and their consequences that are not covered by the given policy. If an insured dies under mysterious circumstances, it is the insurer’s responsibility to thoroughly examine the cause of death in order to rule out foul play and decide whether the death was caused by an incident or circumstance that the policy does not cover.
One needs to understand that life insurance coverage is calculated based on risk, thus there are several common exclusions, such as chronic disease or engaging in dangerous activities, that may result in a policy being denied or an insurer refusing to pay out when the policyholder dies. In other words, your life insurance will not compensate for all types of deaths. There are a number of exclusions for which insurers do not provide coverage. These exclusions are specified in the policy document provided by the company when you first purchase the life insurance plan.
The Most Common Exclusions in Life Insurance
The following is a list of the most common exclusions in life insurance plan:
Suicide claims: Most life insurance firms do not cover suicide deaths within the first year of policy issuance or revival. However, the specific term for which death due to suicide is not covered by the policy varies by insurer, although the average range is 12 months to 2 years. If the policyholder commits suicide during this period, the insurer will not pay the death benefit, but will instead return a percentage of the premiums paid. Typically, insurers repay 80% of all premiums paid until the policyholder’s death. To know the amount you will receive from your life insurance, you can use the mobile app of the insurance company from which you bought the insurance plan. You should review your policy documents to better comprehend the suicide exclusions in life insurance.
Life-threatening activities: Life insurance often excludes coverage for life-threatening activities or hobbies. This is because these activities raise your risk of death. These activities include skydiving, paragliding, rock climbing, racing, and hang gliding. a person may have purchased life insurance shortly before embarking on a vacation in which they intend to participate in adventure sports such as skydiving. If the insured dies as a result of a skydiving accident, their nominee will not be entitled to any benefits because the incident or its consequences are not covered by the life insurance policy.
Maternity-related deaths: Deaths caused by maternity-related causes, such as pregnancy problems, are excluded from life insurance coverage.
War/War-related Acts: A life insurance policy will not pay the death benefit if the policyholder participates in war or war-related activities.
Aviation-related deaths: Insurance companies in India only cover aviation-related deaths in commercial aircraft. If the policyholder is killed in an air crash, the insurer is not bound to pay out the death benefit.
Natural Calamities: Natural disasters or calamities, such as earthquakes, hurricanes, tsunamis, and floods, are typically excluded from life insurance coverage. Thus, if the policyholder dies as a result of a natural disaster, the nominee will not receive the life insurance sum. However, if you reside in a disaster-prone area, you can include particular riders in your base life insurance plan to protect you against natural catastrophes as well.
Murder: Homicide-related deaths are also not covered by a life insurance plan. If the policy’s nominee is shown to have committed or been involved in the policyholder’s murder, the insurance company will not pay the sum assured. If the claims against the nominee are dropped following legal investigations, the insurer may pay out the life insurance amount.
Criminal activities: The Term Insurance policy may not cover the policyholder’s death as a result of criminal acts. This Exclusion is in place to prohibit insurers from paying out for incidents caused by criminal activity. When you buy a life insurance plan online via the mobile app, you can know the specifics of the plan and what is excluded and what isn’t.
Intoxication: If the policyholder dies as a result of alcohol or drug use, the insurer may refuse to cover the death. This Exclusion is in place to protect insurers from having to pay out for incidents caused by reckless activity.
So we are saying,
Before making any term insurance decisions, individuals should thoroughly comprehend the policy’s terms and exclusions. Understanding the inclusion and exclusion conditions of term insurance is important for anyone buying a life insurance plan in India. When you choose to buy your preferred plan via the mobile app of the insurance company, not only will you get the ease of transaction but will also be able to read the inclusions and exclusions in detail without resorting to the hard copy.
Understanding them allows policyholders to make an informed decision and avoid surprises when filing a claim. For example, if a policyholder has a pre-existing medical condition that is not covered by their policy, they may need to look for another policy that does. Moreover, it also helps policyholders avoid engaging in activities that may void their insurance, such as partaking in dangerous sports or activities. It is important to carefully analyze the policy documents and ask the insurance provider the right questions to ensure a clear understanding of the policy’s coverage and limits.
