Common Exclusions in Life Insurance Plans

According to the contract of a life insurance policy, the insurance company is liable to pay the sum assured to the policy nominee, as per the policy terms and conditions, in exchange for the regular premium payments. However, even the best life insurance policies do not cover all instances leading to the death of the life insured. In other words, there are certain cases in which insurance companies investigate the cause of the death and may deny the claim if it is unnatural.
In such a case, the claim is most likely rejected. The following are a few such cases that may lead to an unnatural death and subsequently claim rejection:

Consumption of alcohol and/or use of tobacco or other intoxicants
Participation in a criminal activity or
Participation in a dangerous or extreme sports activity
Death due to a pre-existing undisclosed disease
Exposure due to a war
Death due to suicide or a self-inflicted injury
Excessive smoking resulting in a lifestyle disease
Death during pregnancy or childbirth

It is imperative that not all life insurance policies are suitable for you. Therefore, do assess your requirements and then purchase the best life insurance plan for yourself, as your insurance choice affects the financial future of your loved ones.

Common Inclusions in Life Insurance Plans

The term ‘life insurance inclusions’ refers to conditions that are covered by your life insurance policy. Irrespective of whether you have the best life insurance in place, you may or may not have a coverage for a range of conditions, such as death benefit, income protection in case of permanent disability due to an accident, waver of premium in case of death. Here’s a small description of these benefits:

Death benefit

This benefit is paid to the policy beneficiary as a sum assured, provided the insured individual dies before the policy term ends.

Income protection benefit

This benefit is paid to the spouse or the designated beneficiary in case the insured individual is unable to provide for their family due to an accidental.

Waiver of premium benefit

The benefit is payable to the policyholder if they lose their income source due to a covered condition such as total or partial permanent disability.

Generally, life insurance policies cover all these instances, and thus you must understand these terms before you can choose the best life insurance plan for yourself.

What is the Right Life Insurance Cover for You?

Once you have decided to buy life insurance, the next big step is to choose a specific life cover, or sum assured. Here are some aspects to keep in mind while determining a ballpark figure for the life cover:

1. Consider Your Working Years

A life insurance plan serves as an income replacement tool. Hence, you need to consider the number of active working years it would replace while choosing the sum assured. For instance, if you are 25 right now and have planned your retirement at the age of 50, you have 25 future earning years to consider.

2. Chart Out Your Regular Expenses

The sum assured should cover recurring financial outgoes, including household expenses, bills, and existing loan EMIs on a year-on-year basis. By charting out these expenses for a specific period, you will get a better idea of the sum assured to be chosen.

3. Consider Landmark Stages in Your Family’s Life

Certain stages or events in life require large lump sum amounts. These include wedding, retirement, or child’s higher education. The sum assured should cover them all majorly to ensure your family will not face a financial burden after you.

Difference Between Life Insurance, General Insurance, and Health Insurance

The following table summarizes the differences between various types of insurance plans:

Parameters	General Insurance	Life Insurance	Health Insurance
Basic Benefit	Insurance coverage for non-life assets, like home, health, and travel	Life cover benefit to be given to the family	Health cover to deal with medical emergencies in life
Premium Payment	The entire premium is usually paid at the time of buying/ renewing the policy	A fixed amount to be paid for a specific tenure (in years)	A specific amount to be paid at first and then after every year for policy renewal
Policy Duration	Short term	Long term	Short term
Claim of insurance	In case of unfortunate events defined in the policy terms	Either on the insured’s death or maturity	During a healthcare emergency
Tax benefit Under income tax act 1961	Under section 80D (for health insurance)	Under section 80C	Under section 80D

Life Insurance Policy FAQs

How does life insurance Policy work?

A life insurance policy provides a sum assured to the nominee in case of the untimely demise of the life insured individual. There are different types of life insurance plans that you can choose based on your goals and protection needs.

Which type of life insurance plans is the most affordable?

A term plan is the least expensive variant of life insurance, which does not offer any survival benefits. The plan expires when the policy period ends. However, term plans with return of premium is another variant of term insurance which provides survival benefits.

What are the tax benefits of buying life insurance plans?

You can avail deductions under section of the Income Tax Act, 1961, of up to Rs. 1.5 Lakh per annum on the premium paid towards life insurance. Alongside, the life insurance payouts received by the nominee are exempt from tax under Section 10(10D).

Why should I buy life insurance Policy?

With life insurance, you can make sure that the financial security of your loved ones in your absence, is never compromised. The insurance benefits they receive will help them finance their regular expenses and life goals.

When should I buy life insurance Policy?

The right age to buy the best life insurance policy is when you are young and shoulder the least number of financial liabilities. The earlier you buy a plan; the lesser will be its premium.

Common Exclusions in Life Insurance Plans