any body tell me,What are ‘exclusions’ and ‘limitations’ and how do they affect my life insurance coverage?
Total Comments: 3
Posted: Thu Sep 09, 2010 03:22 am Post Subject:
Any exclusions or limitations would be listed in your policy.
Posted: Thu Sep 09, 2010 11:49 am Post Subject:
'Limitations' depict to what extent your benefits are provided for in your policy agreement.
'Exclusions' depict the services/benefits that are not provided for in your policy agreement. 'Exclusions' may also include conditions under which some of the benefits mentioned on your policy may not be available to you.
Posted: Thu Sep 09, 2010 04:41 pm Post Subject:
conditions under which some of the benefits mentioned on your policy may not be available to you
That's actually a definition of a "limitation", and not a condition of an exclusion.
Limitations are those things which allow the insurance company to pay an amount less than the maximum benefit of the contract, or under certain circumstances if certain conditions have not been met.
As an example, a homeowner's policy may state that the limit of liability is $500,000 for property losses. But if the property is not insured for its full value, the claims payment can be limited by the "coinsurance provision" that pays only in proportion to the amount of insurance in force compared to the amount of insurance required.
The same policy might also limit its payable claims if the insured suffers a covered loss and fails to take reasonable measures to protect the property from additional loss (like failing to cover a hole in the roof caused by a falling object, and the failure results in additional damage that could easily have been avoided if precautions had been taken).
An exclusion, on the other hand, is something that is NOT COVERED, period. Many life insurance policies contain exclusions for "war or acts of war" and "terrorism" and other common causes of loss like suicide or military service, or flying an airplane. If a loss is due to one of the named exclusions, it is simply not covered.
So-called "all risk" policies, like life insurance, do not have to name what IS covered (although all life insurance policies do state "in the event of the death of the insured while this policy is in force"), instead they simply list all the things that they choose to EXCLUDE from coverage. If the loss or cause of loss is not specifically excluded, it will be covered.
Life insurance policies are sometimes LIMITED when it comes to paying a death claim. Some policies only pay 1/2 of the death benefit if the insured dies during the first 1 to 2 years of the policy (known as a "lien" against the death benefit).
Most life insurance policies EXCLUDE coverage for death by suicide during the first 1 or 2 years of the policy and LIMIT their liability to the return of premiums paid to the beneficiary (if they are not going to pay for a death, they cannot keep the premiums that were paid). Paying the premiums in such an instance is not a recognition of their responsibility to pay a death claim.
Posted: Thu Sep 09, 2010 03:22 am Post Subject:
Any exclusions or limitations would be listed in your policy.
Posted: Thu Sep 09, 2010 11:49 am Post Subject:
'Limitations' depict to what extent your benefits are provided for in your policy agreement.
'Exclusions' depict the services/benefits that are not provided for in your policy agreement. 'Exclusions' may also include conditions under which some of the benefits mentioned on your policy may not be available to you.
Posted: Thu Sep 09, 2010 04:41 pm Post Subject:
conditions under which some of the benefits mentioned on your policy may not be available to you
That's actually a definition of a "limitation", and not a condition of an exclusion.
Limitations are those things which allow the insurance company to pay an amount less than the maximum benefit of the contract, or under certain circumstances if certain conditions have not been met.
As an example, a homeowner's policy may state that the limit of liability is $500,000 for property losses. But if the property is not insured for its full value, the claims payment can be limited by the "coinsurance provision" that pays only in proportion to the amount of insurance in force compared to the amount of insurance required.
The same policy might also limit its payable claims if the insured suffers a covered loss and fails to take reasonable measures to protect the property from additional loss (like failing to cover a hole in the roof caused by a falling object, and the failure results in additional damage that could easily have been avoided if precautions had been taken).
An exclusion, on the other hand, is something that is NOT COVERED, period. Many life insurance policies contain exclusions for "war or acts of war" and "terrorism" and other common causes of loss like suicide or military service, or flying an airplane. If a loss is due to one of the named exclusions, it is simply not covered.
So-called "all risk" policies, like life insurance, do not have to name what IS covered (although all life insurance policies do state "in the event of the death of the insured while this policy is in force"), instead they simply list all the things that they choose to EXCLUDE from coverage. If the loss or cause of loss is not specifically excluded, it will be covered.
Life insurance policies are sometimes LIMITED when it comes to paying a death claim. Some policies only pay 1/2 of the death benefit if the insured dies during the first 1 to 2 years of the policy (known as a "lien" against the death benefit).
Most life insurance policies EXCLUDE coverage for death by suicide during the first 1 or 2 years of the policy and LIMIT their liability to the return of premiums paid to the beneficiary (if they are not going to pay for a death, they cannot keep the premiums that were paid). Paying the premiums in such an instance is not a recognition of their responsibility to pay a death claim.
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