Term Life Insurance Articles
Looking Out For Exclusions That May Prevent Life Insurance Payout
2010-01-11
If you're researching life insurance coverage, you've probably noticed that there are quite a few policy types available. For many consumers, it takes a lot of time and research to decide exactly what type of policy is right for them and their circumstances. While actually purchasing the policy is an important part of buying coverage, it's also critical to read the fine print of the available policies. Sometimes, special exclusions may prevent your beneficiaries from receiving a life insurance payout if you die within the term of the policy. As the entire purpose of buying life insurance is to provide for your loved ones after your death, it's well worth some time to study these exclusions and take steps to ensure that you're getting the best possible coverage for your money.
Many exclusions are based upon the activities, lifestyle and career of the policyholder. Most life insurance companies will not pay out on a policy, for instance, if the policyholder dies while participating in a dangerous activity, such as skydiving, bungee jumping or other extreme sporting activity with a fairly high risk factor. Your job can also affect your coverage. High-risk workers such as miners and fishermen might be excluded from coverage if they die on the job. Another common exclusion is a pre-existing medical condition, though many life insurance companies require physicals or other medical tests to ensure that their buyers are healthy before the policy takes effect. Exclusions may vary by policy type, and will certainly vary from company to company and from state to state.
The best way to study your policy's exclusions is to get a copy of your policy and talk through anything that you don't understand with your insurance provider. Ask about any exclusions that seem confusing, and pay close attention to any terms that seem very broad or general. Avoid any of the unnecessary risks that are outlined in your policy (such as the "extreme" sporting activities mentioned above), and ask your insurance agent for tips to make sure that your beneficiaries will receive a payout if you die within the policy's term. If you haven't bought any form of insurance yet, pay close attention to contract language when looking for term life insurance quotes. Look for policies that work best with your lifestyle, and don't hide anything from the insurance companies in order to find better rates. After all, a low premium isn't worth very much if an insurance payout isn't going to happen. Talk over your policy with your beneficiaries, and make sure that they understand the terms as well as you do.
Taking a few steps to understand your coverage can potentially make a big difference.
