Lots of our clients come through our doors with policies they bought online themselves. Others took out with their policy with their mortgage provider when buying a home. These are usually the clients who are less than impressed to learn what’s NOT covered by their Life Insurance policy.
If you’re not familiar with the fine print of your policy, it’s probably time to dig out the paperwork. Yeah, I know, no one has time for that stuff. Except for an Insurance Broker. That’s why it pays to get someone else to check the fine print for you.
And, if you do want to do the hard yards yourself, or you want a better understanding of what’s in your insurance contract, here’s our quick guide to the small print on Life Insurance policies.
The things that the insurer will not pay a claim for (known as exclusions) are listed in your policy document. This is the contract between you (the insured) and the insurer.
Some exclusions are pretty standard across policies.
One of these exclusions is a suicide clause. The insurer won’t pay – for a defined period – if the cause of death was self-inflicted.
Although most policies have this clause, the defined period (from the start date of your policy) ranges from 13 months to 36 months depending on your policy – that’s a HUGE difference!
Unfortunately, some policies also feature additional exclusions which you need to be aware of.
Here are some examples of exclusions from Life Insurance policies we’ve combed through for clients:
- Your involvement in an unlawful act, E.g. dying in a car accident where the overtaking speed exceeded the speed limit “may not be covered”.
- Travel to a country which the New Zealand Government has advised against. If you’re unsure, check it off with your insurer before you head overseas.
- HIV (Human Immunodeficiency Virus) or AIDS (Acquired Immunodeficiency Syndrome).
- Working with explosives, weapons, heights above 20 metres, depths below 30 metres or speeds above 130km per hour.
- War or any act thereof, invasion, acts of foreign enemies, civil war, civil unrest, rebellion, revolution insurrection assuming the proportions of or amounting to an uprising, military or usurped power, riot or civil commotion.
This is a clause we often see in policies purchased through a bank. Although it seems fairly innocuous at first glance, it could exclude a claim if death was caused in a protest situation whether or not the insured was participating.
- The Insured Person being addicted to or under the influence of alcohol, narcotics, or non-prescribed drugs or prescribed drugs if not taken as prescribed by a registered Medical Practitioner.
You need to be particularly wary of this kind of clause if you’ve EVER received medical assistance or counselling for the use of drugs or alcohol, even if it was a long time ago.
All these exclusions, provide wiggle-room when it comes to paying a claim!
Seriously, we do this stuff for fun. Well, maybe not ‘fun’ exactly but it is what we do.
Jil O’Brien is a Registered Financial Adviser. A copy of her disclosure statement is available on request. Information provided in this post is of a general nature only and does not constitute personal financial advice.