Term Life Insurance Articles
What To Understand About Exclusions On Term Life Insurance Contracts
2010-12-18
Term life insurance exclusions are some of the most important parts of policies, but many buyers don't even read over the exclusions section of their contract. The purpose of an exclusion is to protect an insurance provider against death benefit payouts under certain types of circumstances. Different insurance providers qualify these exclusions in different ways, so it's an important thing to look for on life insurance contracts and a vital aspect of a policy to consider when deciding which of several life insurance contracts to choose. Here's a look at a few things that life insurance buyers should know about life insurance exclusions.
First of all, an insurance provider can't name just anything as an exclusion; life insurance exclusions need to outline an extenuating circumstance that could reasonably void the policy holder's benefits. An example would be an exclusion that prevented a payout for policy holders who die in bungee jumping accidents. Bungee jumping accidents would be considered a fairly specific and extraordinary risk that the policy holder chose to take, so this type of exclusion would likely be included on life insurance contracts (and, in fact, it usually is included). However, an exclusion that prevented payout for policy holders who die from drowning wouldn't hold up with most states' insurance commissioners, as this exclusion would obviously be part of a contract just to save the insurance company money.
There are some exclusions that are very common and appear on just about every term life insurance contract. Examples are exclusions for persons who die during dangerous activities such as the aforementioned bungee jumping, exclusions that prevent payouts for people who lie in a significant way on their applications (e.g. not disclosing a smoking habit), and exclusions for people who work in particularly dangerous occupations. It is very important to read about the exclusions of individual life insurance contracts, as these can greatly affect your policy's functionality, and it's especially important to read this section if you have a high-risk occupation or hobbies. You can often ask your insurance agent for more info about exclusions, and you can even get some of them removed, although this will result in higher premiums for most buyers.
Learning about the life insurance exclusions on a term life insurance policy is an important step, but it's by no means the only thing to consider when making a purchase. Look at other contract clauses that might affect your policy's value and always check around for as many life insurance quotes as possible before making a purchase to keep costs down and coverage high.
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Term life insurance exclusions are some of the most important parts of policies, but many buyers don't even read over the exclusions section of their contract. The purpose of an exclusion is to protect an insurance provider against death benefit payouts under certain types of circumstances. Different insurance providers qualify these exclusions in different ways, so it's an important thing to look for on life insurance contracts and a vital aspect of a policy to consider when deciding which of several life insurance contracts to choose. Here's a look at a few things that life insurance buyers should know about life insurance exclusions.
First of all, an insurance provider can't name just anything as an exclusion; life insurance exclusions need to outline an extenuating circumstance that could reasonably void the policy holder's benefits. An example would be an exclusion that prevented a payout for policy holders who die in bungee jumping accidents. Bungee jumping accidents would be considered a fairly specific and extraordinary risk that the policy holder chose to take, so this type of exclusion would likely be included on life insurance contracts (and, in fact, it usually is included). However, an exclusion that prevented payout for policy holders who die from drowning wouldn't hold up with most states' insurance commissioners, as this exclusion would obviously be part of a contract just to save the insurance company money.
There are some exclusions that are very common and appear on just about every term life insurance contract. Examples are exclusions for persons who die during dangerous activities such as the aforementioned bungee jumping, exclusions that prevent payouts for people who lie in a significant way on their applications (e.g. not disclosing a smoking habit), and exclusions for people who work in particularly dangerous occupations. It is very important to read about the exclusions of individual life insurance contracts, as these can greatly affect your policy's functionality, and it's especially important to read this section if you have a high-risk occupation or hobbies. You can often ask your insurance agent for more info about exclusions, and you can even get some of them removed, although this will result in higher premiums for most buyers.
Learning about the life insurance exclusions on a term life insurance policy is an important step, but it's by no means the only thing to consider when making a purchase. Look at other contract clauses that might affect your policy's value and always check around for as many life insurance quotes as possible before making a purchase to keep costs down and coverage high.
