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Exclusions and Limitations

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Common term life insurance exclusions

What are common policy exclusions

The good news is that term life insurance has become somewhat of a commodity these days which means the plans, options, and most importantly...exclusions and limitations are pretty similar for the most part.  Put another way, you can feel comfortable that a carrier or plan you find through our quoting engine will not have significant holes in coverage or uncommon exclusions that are far outside the norm of what a standard term life insurance plan should be.  Let's take a look at some common exclusions and limitations that can be found throughout the term life insurance market.

Most of the core exclusions have to do with certain actions on behalf of the applicant that would essentially negate the life carrier's contractual obligation to pay.  Let's take a look at these.

War Exclusion.  This exclusion is pretty self-explanatory and also pretty obvious as why it is needed.  Usually used in times of war, this exclusion excludes payment during times of war.  There may be life insurance policies available on a group basis or through the government for active duty personnel.

Suicide Clause.  This is a common clause that excludes payment of benefits if suicide occurs in the first two years of the policy. 

Aviation Clause.  This clause would exclude payment during an aviation accident outside of one that occurs on a standard airline scheduled flight (i.e. the passenger on one of the major carriers.  This falls under the umbrella of hazardous activities, occupations, and activities and is primarily geared towards pilots.

Continuing with the hazardous activities, occupations, and hobbies theme, some additional exclusions may apply to activities such as scuba diving, hang gliding, sky diving, and auto/motorcycle racing.   It's important if you engage in these activities to a) make sure to accurately list them on the application/paramedical exam and b) understand whether the policy you have selected completely excludes payment due to death resulting from these underlying activities or charges an additional life insurance premium in order to cover them.  Different carriers and plans will address these usually in one of these two ways but it's important to understand up front how your policy will address these issues.

Another common policy limitation is the contestability clause.  If a carrier finds that there was misrepresentation during the term life insurance underwriting process (usually application/paramedical exam) within the first two years of the policy, the carrier can contest the contract and potentially not pay the benefits.  One more time, this is a key reason to accurately answer all questions during the application process.  We strongly recommend to avoid any misrepresentation to the carrier.  It makes no sense to falsely qualify for life insurance only to have it not pay out when you most need it.  Let us know if you are concerned about qualifying for coverage and we'll try to provide some guidance, and if need be, some high risk life insurance options as an alternative.

Each carrier will have their little tweaks and twists but we deal with strong carriers for the very reason that we do not want the risk of major exclusions for our clients that are contrary to the norm in the market.   You should be able to compare based on carrier rating and premium with confidence in your decision.


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DISCLAIMER   -   Information provided on this page is intended as a general overview.  Your situation regarding life insurance may be different and we strongly          
 recommend speaking with a license life insurance agent.  This information is solely the opinion of etermlifeinsurancequote.com and may not be suitable for you.