Just like in many other types of insurance, life insurance has limitations particularly regarding exclusions of the policy.
There are specific instances when the life insurer does not commit to provide payouts to beneficiaries of the policyholder. Be reminded that life insurance is specifically mindful about the manner of death of the policyholder. It would greatly influence any assessment that pertains to claims.
The suicide clause states that the life insurance would not pay claims to beneficiaries if the policyholder has committed suicide within usually 13 months of taking out the policy.
This clause is logically an attempt to prevent any individual from buying a life insurance policy just to eventually commit suicide in an attempt to escape from financial burdens.
Dangerous activity exclusion clause states that the life insurer would not make payouts to beneficiaries if the policyholder died while participating in dangerous sports and recreational activities like rock-climbing, hang-gliding, or car racing, However, some insurers agree to cover such activities but in a much higher rate of premium.
Act of war exclusion clause exempts the life insurance company from paying out claims if the policyholder died as a result of war. This exclusion is among the most common conditions that insurers specify. It could also come as a part of an aviation exclusion clause, which states that no payout would be made if the policyholder died in a commercial or private plane crash.
Other common exclusions of life insurance policy include participation in illegal tasks and drug or alcohol abuse. You should review the exclusion clauses stated in a policy’s terms and conditions before buying a life insurance policy. You have the option to buy from other policy providers if the exclusions listed are not generous enough for you.