Common Life Insurance Exclusions

Although life insurance is designed to provide benefits for a variety of conditions and events, many things are typically excluded from its cover. In such cases, any claims made for benefit or payments will likely be denied or rejected.

There are usually two types of exclusions in life insurance: general exclusions and specific exclusions. If you compare life insurance from different providers, you’ll find that each will have their own guidelines and definitions for these exclusions. Despite their differences, however, you’ll find the following to be common life insurance exclusions applied today.

General Exclusions

General exclusions are the exclusions that insurers typically have for any type of life insurance plan. These are the default exclusions set in the policies regardless of the applicant’s lifestyle, medical history, and circumstances.

Suicide or Self-harm

Most, if not all, life insurance plans have a suicide and self-harm clause that withholds benefits in claims involving suicide or attempted suicides if it occurs in the first 13 months of the policy.

Most insurers uphold this suicide clause for somewhere between one to two years after the start of the policy or its reinstatement (the vast majority insurers only hold this clause for 13 months, but others hold it for as long as two years). This means that no death benefit will be given if the suicide occurs within this defined period. Once this defined period has passed, then the clause will be waived or be open to re-assessment, depending on the insurer’s guidelines and policies.

In cases involving suicide within the defined period of exclusion, some insurers settle on refunding any paid premiums instead of providing the death benefits.

Aside from cases involving suicide, any injuries, illnesses, or disabilities that are self-inflicted are also not covered by most life insurance plans.

These clauses are designed to prevent applicants from getting life insurance and harming themselves for the sole purpose of receiving financial benefits for themselves or their families.

Criminal Activity

This concerns any injuries or deaths caused by illegal activities. It involves any conditions or injuries directly caused by an illegal activity or those resulting from participation in it.

Recklessness and Negligence

This exclusion concerns injuries and deaths resulting from an applicant’s recklessness and personal negligence. Insurers will have their own definitions for this clause and have varying degrees of exclusions. Generally, this exclusion involves activities and incidents that any reasonable person would not do under normal circumstances.

Specific Exclusions

These are the exclusions that insurers place on their policies based on the circumstances of the applicant. Exclusions and limitations will depend on the applicant’s medical history, lifestyle, and other important factors that can affect the applicant’s risk level. Naturally, these exclusions will vary between applicants. 

Dangerous Jobs

These are the exclusions and limitations based on the risks associated with the applicant’s occupation. This is usually applicable to those who have high-risk jobs such as underground mining, construction, and agriculture and forestry.

Risky Hobbies

Those who participate in high-risk hobbies and activities may find certain exclusions in their insurance policies. This typically involves those who participate in activities such as skydiving, mountain climbing, and bungee jumping.

Occupational Hazards

This exclusion involves any injuries or deaths that are considered as occupational hazards. It includes incidents such as drowning for fishermen or injuries from car accidents for taxi drivers.

Pre-existing Conditions

Although very uncommon with Life Insurance, if you have an ongoing medical condition or illnesses that might recur, then your plan may include exclusions for it. Some insurers have stricter limitations for this than others, so check your insurer’s policies if this is relevant to your case.

Understand the Policy Before Committing

No matter what type of life insurance plan you get, remember that you should always read and understand its policies before committing to it. Every insurer will have their own standards and policies, not to mention the fact that your circumstances will likely be different from others. That’s why it’s always best to compare life insurance from different providers.

If you want to find out more about life insurance exclusions, please contact us to find out more. We’re the leading experts for life insurance comparison Australia wide, and we will do our best to assist you find the cover that best suits your circumstances.

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