Life Insurance Exclusions
Life insurance companies and agents often get a bad reputation because people feel the insurance company is looking for an out on the policy.
It's not that, but it's important that the insured understands what's covered what isn't covered on his or her policy. Certain types of deaths are excluded from payment on a life insurance policy.
One life insurance exclusion is suicide within the first two years of the policy. If the insured commits suicide after two years, the life insurance policy will pay out. Of course, this assumes the insured answered the application questions honestly and did not leave out any pertinent details.
Also, a life insurance policy will not pay out in the event of fraud. An example might be an applicant looking to buy or a life insurance policy after he or she finds out that they've been diagnosed with cancer. If there is a cancer-related question and the insured answers no when the answer should've been yes and subsequently dies, the life insurance policy will not pay out. This is irrespective if the insured dies by cancer, as the policy in this instance does not pay out — not because of the cause of death — but because the insured lied on the application.
Some life insurance policies have exclusions if death occurs within certain regions of the world. These exclusions are different than the suicide exclusion, in that suicide applies to all life insurance policies. Travel-related exclusions are generally applied only if the insured travels to certain areas that the insurance company deems to be a high risk. The insurance company will include this exclusion in the policy at the time of issue. The life insurance policy will generally be issued with some type of amendment form that the insured usually has to sign off on before they receive the policy.
Other insurance companies will choose not to include a travel-related exclusion, but will charge you a surplus premium for the extra risk associated with an applicant who frequently travels to a dangerous location, as deemed by the insurance company.
Life insurance policies may also have exclusions related to acts of war and related to death resulting from self-inflicted wounds or actions as well as criminal activity. In all cases, it's crucial that the insured understand what they've applied for and when their policy will or will not pay out before they blame the insurance company or their broker when there's a problem.
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For more insurance or questions on life insurance and life insurance exclusions, call us at 1-866-899-4849 or visit our Term Life Insurance quote page.