Term Life Insurance Articles
Types Of Exclusions When It Comes To Term Life Insurance Payouts
2009-12-09
When buying a term life insurance policy, it's very important to carefully read every part of your policy's print. This will help you to understand how payouts will work if you die during the term of the policy, and why your life insurance quote costs what it does. In particular, it's especially important to look at the terms governing your life insurance payout and if there are any exclusions on those payments. These are special circumstances surrounding your death that could prevent your beneficiaries from getting any money from your policy.
The most commonly applied life insurance payout exclusion is a suicide exclusion. This prevents a payout from being made if the policyholder commits suicide. This exclusion may extend over the entire length of the term life insurance policy, or it may only apply to the first few years of the policy. In either case, the purpose of the exclusion is to prevent a policyholder from taking out a policy and committing suicide in order to ensure financial well being for his or her family. Basically, this prevents the life insurance policy from becoming something that would encourage an individual to commit suicide. From a rational standpoint this sort of exclusion also protects the life insurance company from taking on an unreasonable risk.
Another similar exclusion (by some measures of logic, anyway) is the dangerous activity exclusion. This operates exactly how it sounds. If a policyholder dies performing some dangerous activity, for example bungee jumping, skydiving or participating in an extreme sport, his or her beneficiaries will not be paid under the terms of the life insurance policy. This is an important exclusion to consider before undertaking a dangerous activity. It's also worthwhile to find out exactly what the life insurance company considers a "dangerous activity." Some common activities such as hunting might be considered dangerous, and it's very important to know the types of activities that could void your policy when getting a life insurance quote or buying a policy. Your occupation could also be dangerous enough to warrant an exclusion, which might void your primary reason for buying term life insurance.
There are dozens of other types of exclusions. Exclusions usually apply to some form of unexpectedly dangerous activity, job or freak event that the insurance company did not anticipate when issuing the policy. Soldiers' families are often unable to collect on life insurance policies with war exclusions, for example.
Knowing your policy is as important as buying the policy in the first place, if not more important, so ask your insurance agent or lawyer about confusing terms and be sure to carefully comb through the entire exclusions section of your policy.
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When buying a term life insurance policy, it's very important to carefully read every part of your policy's print. This will help you to understand how payouts will work if you die during the term of the policy, and why your life insurance quote costs what it does. In particular, it's especially important to look at the terms governing your life insurance payout and if there are any exclusions on those payments. These are special circumstances surrounding your death that could prevent your beneficiaries from getting any money from your policy.
The most commonly applied life insurance payout exclusion is a suicide exclusion. This prevents a payout from being made if the policyholder commits suicide. This exclusion may extend over the entire length of the term life insurance policy, or it may only apply to the first few years of the policy. In either case, the purpose of the exclusion is to prevent a policyholder from taking out a policy and committing suicide in order to ensure financial well being for his or her family. Basically, this prevents the life insurance policy from becoming something that would encourage an individual to commit suicide. From a rational standpoint this sort of exclusion also protects the life insurance company from taking on an unreasonable risk.
Another similar exclusion (by some measures of logic, anyway) is the dangerous activity exclusion. This operates exactly how it sounds. If a policyholder dies performing some dangerous activity, for example bungee jumping, skydiving or participating in an extreme sport, his or her beneficiaries will not be paid under the terms of the life insurance policy. This is an important exclusion to consider before undertaking a dangerous activity. It's also worthwhile to find out exactly what the life insurance company considers a "dangerous activity." Some common activities such as hunting might be considered dangerous, and it's very important to know the types of activities that could void your policy when getting a life insurance quote or buying a policy. Your occupation could also be dangerous enough to warrant an exclusion, which might void your primary reason for buying term life insurance.
There are dozens of other types of exclusions. Exclusions usually apply to some form of unexpectedly dangerous activity, job or freak event that the insurance company did not anticipate when issuing the policy. Soldiers' families are often unable to collect on life insurance policies with war exclusions, for example.
Knowing your policy is as important as buying the policy in the first place, if not more important, so ask your insurance agent or lawyer about confusing terms and be sure to carefully comb through the entire exclusions section of your policy.
