Your life assurance policy protects you in the event of death, disability and dreaded diseases. It is a cost effective way of making provisions if you do not have the capital to provide for any of these life changing events. However, T&C’s apply….
Exclusion clauses are normally legitimately included in life assurance policies to stop policyholders from making fraudulent claims, such as deliberately shooting yourself in the foot so you can receive a disability benefit so they protect the financial wellbeing of the company as the it relies on claims paid out to be covered by premiums collected.
Life Assurance Companies consider your lifestyle habits when underwriting your application. They essentially evaluate the risk that they are taking relative to the benefits being applied for. For example, a news correspondent in a war zone poses a much more serious risk to the assurer than a receptionist in a beauty salon.
The assurer will also consider habits such as smoking and drinking in conjunction with your medical history.
Now, what you need to be aware of is the fine print on some policies which may obligate you to inform the assurer of any changes to your job or lifestyle habits. If you take up sky diving or any other hazardous pursuits you should check with you your assurer that you are covered.
Be very aware of policies which do not require any medicals. They probably exclude any pre-existing medical conditions. If you are not aware of this you may think you have cover which is not actually there.
A common exclusion clause in the assurance industry is for suicide which most companies exclude for a period of two years. However, be aware of the definitions in your policy as some exclusions clauses use wider terminology such as ‘self inflicted injury’.
Another example is, say, you go out and drink too much, drive home too fast on worn tyres and are seriously injured in an accident. Your life assurance company may repudiate a disability claim on the contravention of an exclusion clause stating you may not intentionally break the law. Drinking and driving is a criminal offence and so is breaking the speed limit as well as driving a vehicle which is not road worthy.
So be aware of the exclusion clauses imposed upon you in your policy. This also speaks to the importance of comparing the differences in definitions when changing policies. Older policies may have less restricting clauses than the newer ones. The law leans in favour of the assurer at the end of the day so you need to understand the conditions of your cover as much as you can.