An insurance contract promises to pay a lump sum amount or sum assured in return for the premium paid by the policyholder in the event of an unfortunate event. However, to limit losses and discourage anti-selection, insurance companies have certain "exclusions" to the cover offered. Exclusions are those conditions which are not covered by the insurance company.
When you buy a life insurance policy, it promises the nominee to pay a compensation upon the death of the life assured. However, a suicide is specifically not covered for the first year. The exclusions states that - the insurance company won't pay any claims if the life assured, whether sane or insane, commits suicide within the first year of the policy issuance or within the first year after reviving a lapsed policy. In such a situation the insurance company would return only the fund value, as available on the date of death. The policy will be terminated and no other benefit will be paid.
Exclusions are also applicable for additional riders available under the policy and waiting periods are also a type of exclusions. Some to list down are:
It is important to read the policy terms & conditions carefully before finalising the right product.
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