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5 Common Exclusions Under A Life Insurance Plan

Updated On Feb 23, 2022

Term planning is important for safeguarding the wellbeing of the family members. Term life insurance, amongst the most common life insurance policy kinds available at the moment, is a rewarding investment if done correctly and at the proper time. It should be highlighted that even under insurance coverage, the insured is obliged to name a nominee who will be entitled to receive benefits in the event of the policyholder's death. However, many users and nominees are uninformed that when it comes to granting a term insurance claim, insurance firms operate on specified insurance terms and conditions.

Once someone dies, the life insurance will pay out the guaranteed income, however there are a few typical exclusions that may prohibit your heirs from collecting any funds. If you have life insurance and die under any of the exceptions, the insurance provider may not even have to give out all the premium. To get to know about some common exclusions under a life insurance plan, read on.

5 Common Exclusions Under A Life Insurance Plan

What Are Some Common Exclusions Under A Life Insurance Plan?

Following are some of the common exclusions under a life insurance plan -

  • Accidental death exclusions - Accidental death is covered by term insurance, although there is a danger that the claim will be denied in some instances. In the event of an unintentional fatality, the insurance companies will always conduct an inquiry into the facts surrounding the occurrence. Although the investigation procedure varies each insurer, the findings have to be acceptable in order for the claim to be accepted.
  • Death due to suicide or self harm - Dying as a consequence of self-harm or suicide has always been exempted from term life insurance user agreement. Many insurance firms, however, would gladly refund the policy money if the client actually dies within a year of purchasing the coverage. Some charges are subtracted in this situation. It's also worth noting that almost all term insurance policies prohibit death caused by participation in harmful activities.
  • Conditions regarding lifestyle - Exemptions in term insurance contracts may include death induced by lifestyle decisions. It's worth noting that insurance firms always ask for proof of the policyholder's smoking habits. It is because, if the policyholder smokes as a habit and as a lifestyle choice, the practice might easily shorten the policyholder's life. As a result, insurance firms view smokers as high-risk customers. If an insured individual does not mention his or her smoking habit when acquiring a life insurance plan, the claim may be denied if the death is caused by smoking.
  • Death due to participation in criminal activities - Term insurance plans are meant to give financial support to the policyholder's family members in the event of an untimely death. If the insured person engages in an activity that poses a higher risk of death, the insurance company has the right to deny the claim. It should be highlighted that death as a result of rioting or other criminal behaviour is not covered by the insurance.
  • Pre-existing medical conditions of a person - Throughout the accordance with pre medical issues, insurance providers include a waiting time provision. If the insured person has a pre-existing sickness, they must wait a specific amount of time, as determined by the insurance company, before they are reimbursed for treatment of the medical condition. The waiting time for serious diseases can be anything from a few months to many years.

Endnotes

When you buy a life insurance policy, typically anticipate your family to be able to receive the death benefit if something terrible happens. You should be aware of any exclusions in your coverage. Your coverage may or may not cover a variety of situations. Getting ready is the greatest way to safeguard your family and ensure that they are adequately cared for if you pass away unexpectedly.

Also Read: Tips For Buying The Best Retirement Plan

Disclaimer: This article is issued in the general public interest and meant for general information purposes only. Readers are advised not to rely on the contents of the article as conclusive in nature and should research further or consult an expert in this regard.

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