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Endowment Policies And Exclusions Explained

Published On Nov 01, 2021

Endowment insurance is a sort of life insurance that allows you to lay money aside for a specific purpose. The plan includes a death benefit as well as a maturity benefit. If the assured dies during the policy's term, the promised death benefit is paid. Furthermore, the assured will get the stated maturity benefit if he or she lives to the end of the policy's term. Endowment insurance, on the other hand, provides coverage for both death and maturity while also assisting in the buildup of assets.

Endowment insurance is a type of life insurance that includes both insurance and savings. It allows you to save regularly over a certain period of time in order to receive a lump sum payment at policy maturity if the policyholder survives the policy term.

The assured receives his or her sum assured at a later date, depending on the policy conditions and circumstances. In the event of the policyholder's sudden death, the insurance company will pay the sum assured (plus any bonus, if any) to the policyholder's nominee.

It can also be used to safeguard yourself or your family once you retire, as well as to satisfy other financial needs like funding for your children's education and/or marriage, or to buy a home.

Endowment Policies And Exclusions Explained

Here are a few exclusions of an Endowment policy:

General Exclusions

The following is a list of general exclusions for which the insurer is not obligated to pay death benefits. There will be no remuneration if:

  • Is there a mistake in the claim application?
  • A pre-existing condition causes death.
  • Due to the non-payment of premiums, the policy has lapsed.
  • Death occurs as a result of conflict or acts that resemble war.
  • At the time of registration, there is no deception or fraud.
  • Sexually transmitted illnesses are the cause of death.

Death By Homicide

The death of an assured individual as a result of murder is covered by a life insurance company. The insurance company, on the other hand, will withhold the money if the culprit happens to be the nominee. The goal is to prevent any illegal activity that could result in the company receiving insurance funds.

Exclusions From Accidental Death

If you die in an accident, the insurance company must compensate you in full. Accidental deaths, on the other hand, are subject to a number of limitations. If the assured dies in an accident for any of the following reasons, the firm is not compelled to pay any compensation.

The family will not receive any compensation from the insurance provider if the assured was operating a vehicle while under the influence of drugs or alcohol during an automobile accident.

Participation In Illegitimate Activities

If the accidental fatality happens while engaging in illegal activity with the objective of committing a crime, the assurer may deny the claim.

Participation In Hazardous Activities

The assurer may deny the claim if the unintentional death occurred as a result of involvement in extreme sports or dangerous activities. Bungee jumping, skydiving, motor racing, rock climbing, and other extreme sports are just a few of the options.

Lifestyle-Related Ailments

Before the policy is granted, the employer must be told if the assured smokes or consumes alcoholic beverages. Premiums for these individuals may be greater than for others. If these folks have any pre-existing medical conditions as a result of their lifestyle choices, the corporation may reject their applications in some cases. If the assured lies about his or her habits and dies as a result of them, the firm has the right to deny the claim.


Premiums for endowment plans are higher than for other investment plans, therefore premium costs are also a deciding consideration. Bonus history, customer service, claim settlement percentage, financial situation, and other variables are all considered. In simplest terms, you should choose an endowment policy that is easy to comprehend and does not offer any complicated features or perks.

Also read: 

Benefits of Buying an Endowment plan

Mutual Funds V/S Endowment Plans- Which one is Ideal for me?

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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