T2-L2-P1

Policy Exclusions

The first sentence in the Florida Life, Health and Variable Annuities Study Manual under "policy exclusions" states, "Most life insurance policies contain restrictions that exclude from coverage certain types of risk." The next sentence is very important for understanding a question on the state exam. It says, "If there were no exclusions, premium rates would be much higher "for all policies."

The reality of the insurance market place is that in life insurance policies, there are very few exclusions. The policies may be rated by charging additional premium amounts for high hazard, such as jumping horses, scuba diving over 60 feet, or skydiving.

Rarely, will an insurance policy ever state that "this policy will pay the death benefit upon proof of death, unless a person died jumping a horse, skydiving, or scuba diving over 60 feet deep."

If there are any exclusions listed in modern policies, they will probably concern aviation, and in most cases that exclusion will be limited to military aviation.

Some sources mention "War." War clauses were common in policies written during the period of World War II, when all young males were eligible for the draft and most were going off to war. It was logical at that time to have War Exclusion Clauses.

Most of all the war clauses were rescinded by amendments offered to almost all policyholders after 1945 when hostilities ceased.

There have not been any war clauses added during any of the police actions that the United States armed services have been involved in since that time.

1. The Aviation exclusion, if it's going to be found, is normally found in older policies, and of course, commercial aviation would never be excluded.
   
   
2. Commercial Aviation. Most commercial pilots are usually preferred risks, as their job is more hazardous driving to the airport, than flying the airplane.
   
   
3. Hazardous Occupations or Hobbies. The third item listed is "Hazardous Occupations or Hobbies. " Most of the time, insurance companies charge extra amounts for people's hazardous hobbies or occupations, as opposed to excluding a death benefit during such pursuits. The policy might restrict certain features. For example, they might restrict the waiver of premium if you are involved in motorcycle racing. They would certainly refuse to offer you accidental death. They might charge you an extra $5 per 1000 but issue you a base policy.
   
   Actuarial tables and the experience of insurance companies enable them to determine the additional mortality charges required for different kinds of hazards or occupations such as painting water towers, or being a high steel worker, and avocations such as racing, or sky diving. All of those have a calculated economic value determined in the rating.
   
   
4. Commission of a Felony. The fourth item is a commission of a felony. All health insurance policies that are around today will omit from payment or exclude any injuries suffered during the commission of a felony. Most life insurance policies do not mention this exclusion but they may.
   
   
5. Suicide. Suicide exclusion, as noted earlier, normally has a time limitation of two years.

The following question is a review of the content on this page. Answer it and then click below to check your response.

If there is any exclusion in a policy it would probably regard A____.