A life insurance policy is a security for your family’s future. It’s an investment you make so that you don’t have to worry about your family’s finances, in case you face an unfortunate ending. Life has to go on even after the decease of a dear and near one, and to make sure your dependents can take care of their daily expenses, life insurance is a perfect solution.
However, just like any other insurance, life insurance policies also have several exclusions and other terms and conditions, failing to follow which can make you lose all the benefits. If you are not aware of the exclusions, then even after all the years of paying thousands of dollars of life insurance premiums, your family may be left out in the cold. The good news is that the restrictions have dwindled over the time, making it more convenient for the insureds. Life insurance companies have become far more flexible compared to the past.
What were the general exclusions and what has changed?
It was a common practice for most of the life insurance companies to have immense exclusions such as, hazardous hobbies, aviation, military service, smoking or alcohol related diseases, and HIV/Aids. In the past, if you deceased because of any of these reasons, then the insurer could easily walk away with the premiums without having to make any payouts.
Thankfully, things have changed now. As the insurance market spreads its vast wings and competition increases, insurance companies have become more considerate. The insurers have realized that they are actually there to provide protection to their customers and not just reject their claims.
Thus now, it only matters in which health condition you are buying the life insurance policy. Moreover, it’s very important that you are honest with your insurer about your health, your occupation, hobbies and lifestyle. Depending on these factors, the insurers calculate your risk and set your premium rates accordingly.
For an example, if you are a chain smoker, you should never hide it when buying a life insurance policy. If you get a smoker’s rate, the premiums will definitely be higher as compared to a non-smoker’s rate. However, if you don’t disclose your smoker status and then die as a result of a smoking related disease, then your beneficiaries are not going to get any benefit from your policy.
The insurance companies have thus; become consumer friendly not only in writing policies to people with hazardous lifestyle and occupation but also by removing the restrictions that could make you lose the benefits.
What should you remember to ensure payouts?
There are several things that you should definitely remember to ensure that your beneficiaries get the benefits, you meant them to have. Here is a small list of important facts to keep in mind:
• The one outright exclusion that is strictly followed by all companies - is the suicide clause. If the insured commits suicide within one or two years (depending on state rules) of the insurance contract, then the beneficiaries get the premiums back but not any death benefits.
• Read your policy (fine print) very carefully to fully understand it, before you buy your life insurance.
• Be honest and frank to your insurer about your health condition, hobbies and bad habits. Give all required information with utmost possible accuracy.
• Clearly mention the name of your beneficiaries, contingent beneficiaries and required information.
• Do not let your life insurance policy lapse, and continue to give premiums on time, so that your policy stays in place and serves its purpose to the fullest.
Life insurance policies have also become cheaper apart from becoming more flexible than before. So, buy a suitable life insurance policy to secure the lifestyle of your family. If you are aware of the policy exclusions and abide by the terms of the policy, then you can have the peace of mind that you have invested in a meaningful way of caring for your loved ones.Blog Category