Typical Life Insurance Exclusions and Limitations You Must Know About
Exclusions and limitations are the part of insurance coverage that you can easily overlook if you’re not careful. These coverage limits help define the framework of how insurance agencies issue payouts.
Here are important points to know about life insurance exclusions.
The suicide clause means there may not be a full payout to beneficiaries if the policyholder commits suicide within two years of signing up for the life insurance plan. Such a payout will typically be no more than the accumulation of premiums. This provision prevents people from using suicide as a way out of debt.
A drug overdose may be considered accidental, depending on the evidence and the circumstances. If so, the insurer will pay out benefits to survivors. If a suicide takes place after two years of signing the policy, it will likely be covered.
Courts have the final say as to whether or not the cause of death is suicide. The determination process begins with a medical expert issuing a death certificate for the policyholder. The beneficiary then submits the certificate to the insurance company along with their claim.
The insurer will then conduct an investigation before sending a payout. If the claim is denied, it can then be taken to the Insurance Commission for review. The case will either be resolved or go to court for a final decision.
- Dangerous Hobbies
Certain dangerous activities are not covered by a standard life insurance policy. Anything that’s life-threatening may fall under the category of exclusions. These activities include skydiving, auto racing, and rock climbing.
If you are concerned that your lifestyle might be susceptible to dangerous activity exclusions, talk with an insurance expert to find an appropriate policy. You don’t necessarily have to give up adventurous sports you enjoy. Just be aware that insurance providers base payouts on risk assessments. Swimming, for example, has risks, but if you practice pool safety standards and let your insurer know about it, you can customize a policy for it. Some insurers may cover these activities for higher premiums.
When a life insurance policy includes an aviation exclusion, it means that the only way a payout is issued to beneficiaries is if the policyholder is killed in a commercial plane crash. But death from a private plane crash will not be covered, whether the policyholder is a pilot or a passenger. Different policies have different stipulations, so it’s imperative to review them thoroughly before signing them.
- Act of War
Another exclusion leading to no payout is if the policyholder dies from an act of war. Some policies may use specific terms such as “armed conflict” as an exclusion. Other acts of war exclusions may pertain to an invasion from another country, a blockage, sabotage, or terrorism. Make sure you understand how your insurance agency defines “acts of war.”
Get the Best Life Insurance for Your Family with Remland Insurance
Life insurance policies can help families in times of crisis. Just be aware of what the policy states and what it means. Contact our team at Remland Insurance Services, Inc. today to find the ideal life insurance plan for your needs.