What are life insurance exclusion, indexing and loadings?

Published on November 23rd, 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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When taking out a life insurance policy to protect you and your loved ones an insurer will assess you on an individual basis to ensure that you get a policy that adequately covers you. Your premiums are also calculated on the amount of risk that you pose. High-risk individuals are usually charged a higher premium.

However, all life insurance policies come with exclusions which are high-risk conditions, cases, and activities that you will not be able to make a claim on. What this means is that should you sustain an injury, illness, or pass on due to these exclusions, your insurer will not cover you for when the payout is made.

Exclusions are usually outlined in your policy’s Product Disclosure Statements (PDS) which will state how these exclusions can affect your policy. Some of the general exclusions that come with life insurance policies are:

  • Self-inflicting harm such as suicide that occurs 12- 13 months after taking out your policy, but you can be covered if this occurs outside of this time frame
  • Injury, illness, or death sustained through participating in a criminal or illegal activity
  • Hazardous activity such as acting participating in a dangerous activity such as extreme sports, driving recklessly, not seeking medical treatment for extreme and obvious health issues and ailments
  • Travelling to high-risk areas that have been declared a ‘no go’ area by the government
  • Depending on the life insurance policy that you take out there may be some high-risk occupations that they may not cover.

Premium loadings

This is a loading fee that is a percentage that is applied to individuals that have a higher likelihood of making a claim in the future. What this means is that the loading is added to individuals who have higher-risk lifestyles. This is also applicable to people who are not able to get access to standard life insurance rates due to a pre-existing medical condition, high-risk lifestyle, or the type of occupation that they have. Some of the reasons that you may attract a loading fee is:

  • Unhealthy lifestyle choices such as heavy drinking and smoking which can impact your health
  • pre-existing medical conditions that you may have had in the past, current, or a re-occurring condition can attract a loading fee. Some conditions will not be covered at all, but this will have to be checked with your insurer.
  • If you have a risky occupation or participate in a risky hobby that can put your life at risk.


This is a standard feature that comes with most insurance policies to make sure that the sum you have insured for keeps up with the inflation rate so that you are adequately covered when your policy is paid out. Some policies will automatically include this fee with your policy fee, but others may put this as an extra cost. Checking your policies features and fees that come with it will help you know whether it is suitable for you. Indexing works by using the Consumer Price Index (CPI) or the inflation rate to protect the value of money in your policy.

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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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