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Life insurance exclusions refer to the specific circumstances or situations in which the insurance company will not provide coverage or pay out benefits to the policyholder or their beneficiaries. These exclusions are typically listed in the policy contract and can vary depending on the insurer and type of policy. Policyholders need to understand these exclusions before buying a life insurance plan to ensure sufficient coverage for their needs.
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Here is a list of all the most common exclusions in life insurance offered by Indian insurers:
Most life insurance companies in India do not cover death due to suicide within the 1st year of the policy issuance or revival. The exact period for which death due to suicide is not covered under the policy might differ from insurer to insurer, but the general range is between 12 months to 2 years. During this period, if the policyholder commits suicide, the insurer will not pay the sum assured on death, instead will return a percentage of the premiums paid. Usually, the insurers return 80% of the total premiums paid until the policyholder's death. You should go through your policy documents to get a better understanding of the suicide exclusions in life insurance.
Life-threatening activities or hobbies are generally not covered under life insurance. This is because these activities put you at a higher risk of life and increase your mortality rate. These activities include adventure sports like skydiving, paragliding, rock climbing, racing, and hang gliding.
Deaths caused due to maternity-related reasons like complications during pregnancy are a part of the life insurance exclusions and are not covered under life insurance.
These exclusions in life insurance might have been less common in the older days than it is now, but a life insurance policy will not payout the death benefit in case the policyholder participates in war or war-related acts.
Deaths due to natural disasters or calamities like earthquakes, hurricanes, tsunamis, and floods are usually life insurance exclusions. Thus, in case the policyholder dies due to any of the natural calamities, the nominee will not be paid the life cover amount. However, in case you live in a calamity-prone area, you can opt for specific riders in your base life insurance plan to cover you against natural disasters as well.
Deaths due to homicide are also not covered under the life insurance policy. In case the nominee of the policy is revealed to have committed or has been involved in the murder of the policyholder, the insurance company will not pay the sum assured. If the allegations against the nominee are lifted after legal investigations, the insurer might pay out the life cover amount.
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Let us take a look at some of the exclusions in life insurance for which the insurance company might reject your accidental death claims:
Life insurance policies in India do not provide coverage against pre-existing diseases and ailments. Only critical illnesses diagnosed after the policy purchase and included in the policy document are covered under the policy.
All life insurance policies in India do not provide coverage if the policyholder performs a criminal or illegal activity. These unlawful activities include driving under the influence of alcohol or drugs, consuming illegal drugs, injury or death due to a car accident where the driver not wearing a seatbelt or was speeding, participating in illegal protests, etc.
STDs like HIV, AIDs, or other diseases caused due to lifestyle choices are excluded from life insurance coverage. Thus, life insurance claims on deaths due to STDs might be rejected by the insurance company.
Here is a list of all the life insurance policy rejection reasons:
Providing Incorrect Information: Providing the insurer with incorrect information at the time of policy purchase can result in life insurance claim rejection. This includes the details provided regarding age, medical conditions, or smoking habits.
Contestability Period: As per the IRDAI, the insurer can cancel the life insurance policy within the first 2 years of policy purchase/renewal if a discrepancy is found in the details provided by the customer. During this period, the insurer can investigate the death claims and even deny them.
Note: Since a term insurance plan is a type of life insurance, the list of term insurance exclusions is similar to the exclusions in life insurance.
Provide Accurate Information: When applying, ensure all details regarding your health, lifestyle, and medical history are accurate. Any misrepresentation or omission, like smoking habits or pre-existing conditions, can lead to claim rejection.
Understand Policy Exclusions: Review the policy exclusions thoroughly to understand what is covered and what isn't. Knowing this helps avoid situations where a claim might be denied due to an exclusion you were unaware of.
Keep Policy Updated: Inform your insurer of significant life or health changes. Keeping your policy updated and reflecting your current situation reduces the chance of claim issues later.
As seen above, while life insurance is an important financial product that offers a variety of benefits to the policyholder and covers a range of deaths/eventualities, it still has some exclusions. Thus, it is important to thoroughly review the policy documents to understand better all the inclusions and exclusions of life insurance in India.
Note: Before buying, it is suggested that you calculate the term plan premium using the Policybazaar term insurance premium calculator online tool.
†Policybazaar does not endorse, rate or recommend any particular insurer or insurance product offered by any insurer. This list of plans listed here comprise of insurance products offered by all the insurance partners of Policybazaar. For a complete list of insurers in India refer to the Insurance Regulatory and Development Authority of India website, www.irdai.gov.in
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