There are two types of life insurance policies – term insurance, and whole life insurance. Term insurance or fixed plans offer risk coverage for a fixed period. This means that, if you live beyond the policy term, the policy won’t protect you from any risks related to your death. On the other hand, whole life insurance policies protect you for your entire life. In simple terms, it doesn’t matter when you meet with death, you’ll be protected even after it.
However, there are various exclusions and clauses in both of these insurance policies, which increase or decrease the payable premiums. Hence, it is essential to have in-depth information of all these terms, so that you can avail maximum benefits.
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General Exclusions in Life Insurance Policies
Exclusions in the policies are based on the number of risks they hold. If some scenarios have greater risks, they would be excluded from the policies. Exclusions in life insurance policies include:
Any job which contains higher risks like armed forces personnel or construction and gas industries.
Adventure sports like skiing, paragliding, racing, or skydiving. Any death caused due to an act of carelessness.
Policies for accident covers, cannot be claimed in the first 30 days of purchasing one. For some sicknesses like kidney surgeries, cataract, etc. there is a mandatory waiting period of 24 months. Claims for all the diseases which are previously existing and are disclosed at the time of application can only be made after a compulsory waiting period of 48 months.
A history of serious medical diseases cancer or any other life-threatening illnesses. It also includes suicidal attempts or self-inflicting injuries leading up to death.
Smoking or drinking habits or any other lifestyle habits which carry greater high risks or premature deaths.
Exclusions also include a clause of co-payment when a senior citizen purchases such a policy. Under this, the insurance providers pay the 80% of the claim, and the insured has to pay only remaining 20%.
Important Clauses in Life Insurance Policies
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According to this clause, if you are not satisfied with the purchased policy, you can surrender it and get the refund of your amount paid. However, you can only return such a policy under 15 days of reception of the policy. The 15-day period starts from the date on which you get all the related documentation (not on the date when the policy has been issued). Such a clause applies for both health insurance and life insurance policies which have a tenor of three years (or more).
There are many instances when the insurance provider dismisses the claims made by the insured. The ground for dismissal is simply that the policyholder has not disclosed all the information accurately at the time of purchase. Hence, such clause offers the security to the policyholder under Section 45 of the Insurance Act. Under the rules of this section, insurance provider doesn’t have the right to question the disclosures made by policyholder after the completion of two years of the policy. It includes any statement made by policyholder regarding his/her medical conditions or by their medical officers.
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There have been many reported cases of disputes between senior citizen policyholders and insurance providers over renewability parameters. Some insurance providers don’t renew their policies only because the policyholders have opted to renew at a time when they need it the most. As per IRDA, the only exclusions for not renewing the policies are either fraudulent acts, moral hazards, or misrepresenting the facts. Also, it can be renewed only on the terms which are already discussed and signed between the two parties at the time of issuing. Any other changes can be done only after getting the consent of the policyholders in the written agreement.