What are exclusions from life insurance payments?

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Life insurance policies will not provide benefits under certain conditions. Exclusions to coverage are listed in every life insurance contract and specifically spell out when coverage is not applicable.

Purpose

Exclusions are included in life insurance policies to limit the insurance company's exposure to claims resulting from intention or high-risk activities.

Types

Several types of exclusions may be included in life insurance policies. For example, dangerous activities, such as skydiving or hang gliding, may be excluded from coverage, and the insurance company may not pay out if death occurs from a private plane crash where the policyholder was a passenger. Death due to an act of war also may be excluded.

Benefits

Insurance companies benefit from exclusions by not having to pay claims for irresponsible acts of policyholders. In turn, policyholders benefit because insurance companies will have less of a need to raise premiums to cover claims.

Time Frame

Generally, exclusions last for the life of the policy. One exception is a suicide exclusion, where insurers may provide coverage if the suicide occurs after the policy has been in force for a specific period of time, such as two years.

Warning

Policyholders should have a thorough understanding of what is not covered by a life insurance policy. If the policyholder's death occurs due to an excluded act, it could leave the beneficiaries in a financial bind.

Source:

My Life Insured: The Process of Buying Life Insurance

Life Insurance Rates: Exclusions

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What are exclusions from life insurance payments?

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