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4 important life insurance exclusions that you need to know about

Published on November 20th, 2020
  Written by 
Bill Tsouvalas
Bill Tsouvalas is the managing director and a key company spokesperson at Savvy. As a personal finance expert, he often shares his insights on a range of topics, being featured on leading news outlets including News Corp publications such as the Daily Telegraph and Herald Sun, Fairfax Media publications such as the Australian Financial Review, the Seven Network and more. Bill has over 15 years of experience working in the finance industry and founded Savvy in 2010 with a vision to provide affordable and accessible finance options to all Australians. He has built Savvy from a small asset finance brokerage into a financial comparison website which now attracts close to 2 million Aussies per year and was included in the BRW’s Fast 100 in 2015 as one of the fastest-growing companies in the country. He’s passionate about helping Australians make financially savvy decisions and reviews content across the brand to ensure its accuracy. You can follow Bill on LinkedIn.
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1. Suicide or self-harm

Although many life insurance policies may have different criteria when it comes to exclusions, there are general exclusions that get applied across policies. Suicide or self-harm is one of these exclusions that generally come with many policies. Should you pass on due to suicide or commit self-harm within the first 13 months of taking out the policy the benefits can be withheld by the insurer. Even if you reinstate your policy and commit self-harm, intentional injury, illness, disability, or suicide between one or two years the exclusion will apply.

2. Travelling to high-risk destinations

Most insurance do not pay out a life insurance benefit if you travel to countries in which the Department of Foreign Affairs and Trade (DFAT). Has advised being unsafe to travel to. You may need to consider your travelling route to avoid having your benefits not being paid out. You can consider taking out travel insurance to help cover you in the event where you need to go due to work. For example, the DFAT lists countries that are safe to travel to on a scale of 1.0 being safe to travel to 4.0 being countries that can cause you not to have your insurance policy paid out to you.

3. Criminal activity

Exclusions can be rolled out when you get involved in criminal activity. According to the Australian Criminal Intelligence Commision, estimates that organised crime costs Australians $36 billion annually (https://www.acic.gov.au/about-crime/crime-types ). Should you fall ill, sustain an injury, or pass on due to criminal activity your insurer will not pay out your benefit. This also includes using illicit drug activity.

4. Participating in reckless behaviour

The definition of participating reckless behaviour may differ among insurers which need to be checked in the product disclosure statement. However, the general exclusionary behaviour that will not be covered by your policy is if you participate in an activity that you won’t do under normal circumstances. This could also include extreme sports that could be considered as personal negligence. Some insurers may be able to cover extreme hobby sports but this usually attracts a premium loading.

There are some cases where you will be able to remove a policy exclusion by having your policy renewed. Most underwriters are likely to remove exclusions when you have ceased to participate in hazardous activities or occupations after a certain amount time frame.

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This guide provides general information and does not consider your individual needs, finances or objectives. We do not make any recommendation or suggestion about which product is best for you based on your specific situation and we do not compare all companies in the market, or all products offered by all companies. It’s always important to consider whether professional financial, legal or taxation advice is appropriate for you before choosing or purchasing a financial product.

The content on our website is produced by experts in the field of finance and reviewed as part of our editorial guidelines. We endeavour to keep all information across our site updated with accurate information.

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.

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