Nobody likes to read the documentation of the insurance policy. The policy can be long, tedious and full of jargon, which disturbs the average person about what exactly they sign or agree to. That is why it is so important to have an unbiased agent on your side, so that you can answer any questions about a policy fairly and without prejudice. Of course it is good to be as well informed as you can and not only to rely on an agent. There are some important things to watch out for while you are reading a potential policy, and one of these is the exclusions that the insurance company may have attached to the life insurance policy.
Exclusions are circumstances that life insurance companies use to get out of the benefit upon the death of the policyholder. It is important to know what types of exclusions are included in your policies so that you can adjust the policy to your needs and know when your death is covered or when it can be disputed by the company. Sometimes, the exclusions also apply to certain types of personal loans for family money, especially when we deal with say a new direct lender in the UK. You can find more info about this by reading the Guardian.
The contestable period
This is a period reserved by insurance companies that gives them (usually) two years to dispute the policy. During the disputable period, the insurance company may open the acceptance of the policy and if they find that information was withheld or misinterpreted that would have led to higher premiums, less coverage, or would have ceased the policy of approval in the first place can challenge and change the policy or make it invalid. The insurance company also does not have to pay any benefits if the policyholder would commit suicide within the disputable period, or if they died and it was discovered that information was lacking that would have led to a change in the policy. A note, the arguable period is technically no exception, but serves the same function for our purposes because it can keep the benefits of being paid.
This exclusion clause protects the insurance company against paying benefits if you die while violating the law. Although this may sound unlikely, it is important to remember that apparently trivial matters are actually illegal. For example, if you were driving on a highway with a maximum speed of 55 mph and you were traveling at 60 mph when you were killed in a car accident, you were involved in an illegal activity and the insurance company could no longer pay.
In the same way that dying, while you are involved in an illegal activity, can end benefits, dying in a dangerous activity can have the same result. Do not worry, you do not have to guess which activities are considered dangerous and you can leave without cover; the specific activities are mentioned in the exclusion clause. Better still, if you enjoy rock climbing during your free time (for example) and it is listed as a “dangerous activity”, you can usually pay a higher premium and you must ensure that the dangerous activity is removed from the clause so that you still are insured. Or if you do not get the right coverage you need, you may need to look at a risky life insurance policy.
Hopefully this article adds to your knowledge about how insurance works.