A guide to life insurance policy exclusions

Taking out life insurance is a great way to cover your family should they need financial protection in the event of your death. Some life insurance policies will only cover you for a set amount of time (a fixed term), while others will keep you covered for the whole of your life, depending on the cover you take out. No matter which type of policy you take out for life insurance, you should always read the small print carefully, as many providers have exclusions detailed in their terms. You should note these exclusions and determine whether they could affect your eligibility to make a claim in future. Some exclusions mean that cover is void in some instances. Always make sure you understand your policy documents.

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What are exclusions?

Exclusions are instances in which cover cannot be offered. Many companies place exclusions on policies because there are some instances that pose a great level of risk to them. There are many reasons why insurers turn down applications for cover or place exclusions on policies. These include:

  • Covering those who are in high risk jobs such as industrial workers, divers and members of the armed forces
  • People who partake in dangerous sports or hobbies such as skydiving, mountain climbing, and motor sports.
  • Those with underlying health conditions such as heart disease, diabetes and various types of cancer.
  • People with underlying addictions to drink and/or drugs, or those who have struggled with addiction problems in the past.
  • Those with an unhealthy lifestyle, including heavy smokers and people who are obese.

Not all insurers will approach the above exclusions in the same way. You should also note that there are many circumstances in which life insurance will be invalidated and your family will not be able to make a claim. These circumstances include:

  • Death as a result of drug misuse and/or alcoholic poisoning
  • Death as a result of a terrorist attack or war
  • Death as a result of self-harm or suicide
  • Death as a result of reckless behaviour

It is important that you check the small print of your life insurance policy to check what you are covered for. Check your premiums and whether they are due to rise after a certain amount of time, or whether they will remain the same throughout your policy’s duration. This is particularly important if you are at risk of suffering health problems in future and need to make a claim. Make sure your policy has premiums that can be flexible and reviewed on a regular basis to ensure your life insurance remains cost-effective.

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What is full disclosure?

Insurers have the right to cancel any policy where they believe that a customer has not fully disclosed all correct information about their health and personal circumstances. When customers take out life insurance, they must declare accurate and truthful information about their health, lifestyle and circumstances when applying for cover, known as ‘all material facts’ or ‘full disclosure’. Customers must inform insurers of any medical conditions they currently have. Likewise, insurers have come under pressure to ask customers all relevant questions in the application process to ensure that they are given all the information they need. This is why life insurance applications are so thorough and detailed.

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