Before you sign on the dotted line of your life insurance or mortgage protection application, you need to know what is and what’s not covered by your policy.
In this article, I’m looking at exclusions in relation to life insurance policies without serious illness cover.
There are a lot more exclusions when it comes to serious illness cover but they’re for a future blog post.
So what grounds does the insurer have to deny your claim?
Not so long ago, it was common for a life insurance policy to exclude death claims due to acts of war, dangerous pastimes and high-risk jobs.
But due to competition between the life insurance providers, these exclusions have disappeared.
Customers have become wiser and more demanding so every company wants to offer the most straightforward policy.
By they way, I know it’s hard to believe but life insurance companies are in the business of insuring you, not rejecting your claim.
They don’t want the negative publicity associated with rejecting claims.
But from your point of view, the fewer life insurance exclusions that you can have in your policy, the better off you are.
All life insurance policies contain an exclusion for death “at your own hand”.
If a life assured dies within a year of the start date as a result of their own deliberate act, we will not pay you any benefit under the policy.
However if the policy has been assigned for the granting of a loan, then most insurers will pay the lesser of the outstanding loan or the amount of cover remaining on the policy.
OR in plain English if your policy has been used to draw-down a mortgage, your mortgage will be cleared.
I say most, because one insurer will not clear a mortgage due to suicide in the first 12 months, this insurer will just refund the premiums paid into the policy.
You may not think this too important as it will never happen to you.
Unfortunately I have had two death claims due to suicide where the policies cleared the mortgage and gave the family some financial stability.
Very sad but it happens all too often.
Life insurance exclusions are something to keep in mind when buying mortgage protection or life insurance.
If you are considering serious illness cover, the exclusions are even more important.
You should really take independent advice before buying critical illness cover.
Keep an eye out for a future blog post on serious illness exclusions.
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