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
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.
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.
Clause. This is a common clause that excludes
payment of benefits if suicide occurs in the first
two years of the policy.
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
occupations, and activities and is primarily geared
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.
policy limitation is the contestability clause.
If a carrier finds that there was misrepresentation
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.
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.