Life Insurance Exclusions

Find out some of the typical life insurance exclusions right here with Savvy.

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, updated on July 19th, 2023       

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When you purchase life insurance, taking note of the exclusions is a crucial step to take before committing to a particular policy and insurer. It can help you and your family maximise your chances of avoiding any rude surprises when a claim is made on one of your plans.

You can find out more about what incidents are commonly excluded from coverage by life insurance companies right here with Savvy.

What are some of the most common life insurance exclusions in Australia?

Even the top life insurance companies in Australia offer policies with exclusions. As such, it's important to be aware of the following when you buy your insurance:

Suicide and self-harm

Some policies may not cover claims made relating to suicide or self-harm. However, these will generally only be excluded if they take place within the initial exclusionary period set by your insurer, which is typically the first 13 months of your policy. Claims made after this period can be paid out, though your coverage will be subject to your insurer’s terms and conditions. Coverage can also be excluded from total and permanent disability (TPD) insurance policies if you become permanently disabled due to self-harm or attempted suicide.

Incidents relating to drug or alcohol consumption

If your claim is being made as a result of drug or alcohol use, it will also likely be denied. There are some exceptions to this blanket rule, though; if the drugs in question were medication prescribed by a doctor and consumed as advised, the exclusion most likely won’t apply and you can receive a payout from your claim.

Incidents relating to illegal activity

Similarly, any injuries or accidental deaths which occur in the process of committing a crime will be excluded from your life insurance coverage by your insurer. This exclusion may cover a wide range of potential illegal activity, ranging from more serious crimes such as an armed robbery to those in which you may not even be aware you’re breaking the law, such as trespassing on private property.

Pre-existing conditions

Some insurers will exclude coverage if you fall ill, are permanently disabled or pass away due to a pre-existing condition. Providers will typically have a list of pre-existing conditions which can and can’t be covered, but these are often assessed on a case-by-case basis. As such, your pre-existing condition may be covered if you’re able to satisfy your insurer’s qualification criteria. While some insurers will require you to undergo a medical exam if you have a pre-existing condition, others may not require you to do so.

High-risk professions

The job you’re working in may also be excluded from your policy coverage in certain situations. When assessing your application, insurers will consider your employment as a factor in determining the level of coverage you’re able to receive. Examples of industries which can fall into the high-risk category include mining, health (such as nurses or doctors) and other areas dealing with heavy machinery and hazardous substances. You may be able to access coverage even if you work in a high-risk position if you pay more for your life insurance, however (subject to your insurer’s terms and conditions).

Travel to countries with government warnings

Finally, some insurers may also exclude any incidents which originate overseas in a country with government-issued travel warnings in place. You may find that if you’re travelling to a country with either “Reconsider your need to travel” or “Do not travel” as the listed advice, anything occurring there which results in your death, critical illness or injury or permanent disablement isn’t covered. Some insurers may cover you regardless of travel warnings, however.

It’s important to note that not all of these exclusions are applied as a blanket rule across the board. Different insurers will have different rules for their policies and what is and isn’t included, so it’s always crucial to compare offers before you buy and read the fine print.

How do I find out the exclusions on a life insurance policy?

When comparing life insurance quotes, you can find all the information you need about your policy’s inclusions and exclusions by studying the Product Disclosure Statement (PDS). This document lays out all the terms of your coverage agreement so you can be more certain of what is and isn’t covered.

It’s essential to familiarise yourself with multiple PDSs before settling on your final decision, as you should always be certain about the benefits which different policies provide you and any drawbacks in the form of exclusions or more limited coverage.

Frequently asked questions about life insurance exclusions

Is it possible for my life insurance application to be denied?

Yes – there can be instances where your insurer will deny your application outright instead of setting out more exclusions. This may be the case if you’ve recently suffered a major injury or illness or if you’ve already been diagnosed with a terminal condition.

This can also happen if you fall outside their eligibility criteria, such as if you’re above their maximum entry age at the time of attempting to buy your policy. In general, you won’t be offered insurance if you’re deemed too great a risk by your insurer, but exclusions are more common than outright denials.

What’s the difference between a life insurance exclusion and loading?

While an exclusion isn’t covered by your policy at all, a loading is an added fee you’ll be required to pay for your life insurance coverage if you’re deemed a greater risk. For instance, if you have a pre-existing condition which can be covered by your life insurance provider, you may have to pay a loading in order for it to be included.

Can my life insurance exclusions be updated?

Yes – you won’t necessarily be stuck with the same exclusions and loadings for the entirety of your term life insurance policy. You can apply to have these reviewed if your lifestyle has changed, which may happen for any number of reasons.

Quitting smoking is a big one which can lead to the cost of your policy being reduced, as can stopping a hobby which was considered too dangerous by your insurer or seeing improvement in your health, such as overcoming a pre-existing condition or losing weight.

What is life insurance indexation and how does it work?

Life insurance indexation is the process of increasing your total insured sum in line with inflation, which is often known as inflation proofing by insurers and provided as an add-on for life insurance policies. It’s important to have your bases covered if the cost of living increases, as your $200,000 worth of cover may not be worth as much in 20 years’ time compared to what it is today, for instance.

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Compare life insurance policies side-by-side

Through Savvy, you can consider a range of competitive life insurance policies from reputable insurers, whether you're after life, income protection, trauma or TPD cover. Get the ball rolling on comparing your available options today!

Disclaimer:

Savvy is partnered with Compare Club Australia Pty Ltd (AFS representative number 001279036) of Alternative Media Pty Ltd (AFS License number 486326) to provide readers with a variety of life insurance policies to compare. Savvy earns a commission from Compare Club each time a customer buys a life insurance policy via our website. We don’t arrange for products to be purchased from these brands directly, as all purchases are conducted via Compare Club.

Savvy does not compare all life insurance policies or providers currently operating in the market. Any advice presented above or on other pages is general in nature and doesn’t consider your personal or business objectives, needs or finances. It’s always important to consider whether advice is suitable for you before purchasing an insurance policy.

For any further information on the variety of insurers compared by Compare Club or how their business works, you can read their Financial Services Guide.