What are life insurance exclusions?

Many people consider a robust life insurance policy the best way to provide financial support for their loved ones when they die or if they die too soon. In many cases, this is indeed the way life insurance works. If your life insurance policy includes exclusions, however, there may be certain situations in which a payout may be denied or reduced. If you’re wondering what life insurance does not cover, this guide on policy exclusions, crafted by Bankrate’s experienced insurance editorial team, may come in handy. Understanding your exclusions may give you the peace of mind to know when your beneficiaries are — or are not — covered after your death.

Common life insurance policy exclusions

A life insurance exclusion is a situation or circumstance that prevents your beneficiaries from receiving your death benefit. Essentially, it means that certain causes of death are not covered by the policy. Life insurance exclusions are regulated at the state level, but insurance companies can decide which of those exclusions they include in their policies. The main reason life insurance companies add exclusions is to protect themselves from fraud and excessive risk.

Exclusions will be listed in the policy at the time of application, so the insured will know which causes of death may not be covered by the policy before accepting a policy. You might be surprised to learn what situations may not be covered by insurance. Some common life insurance exclusions include death caused by:

Suicide: If the policyholder dies by suicide within a certain timeframe after purchasing their policy, then a life insurance suicide exclusion likely applies, and the insured’s beneficiaries are not eligible for death benefits. In most cases, the suicide clause is a two-year period, but this will be defined in the policy.
Acts of war: If a policyholder dies as a result of wartime activities, coverage may be denied. This is typically not an exclusion if your policy is designed specifically for service members, which may be available through the Department of Veterans Affairs or through private insurers.
Aviation accidents: Although fairly rare anymore, death caused by aviation accidents may be listed as an exclusion.
Criminal activities: If your death occurs during the commission of an illegal act, your insurer may deny the death benefit claim.
Specific hobbies: Although every insurer may have a slightly different definition for what they consider dangerous hobbies, activities such as skydiving, SCUBA diving and rock climbing could result in a denied claim if they are outlined as excluded in the policy.

Policyholders shouldn’t expect their policies to be filled with exclusions, but let’s dig into some of these exclusions a bit further.

A suicide clause is standard in the majority of issued life insurance policies. The suicide clause is in place to prevent individuals from purchasing a life insurance policy when they are struggling with mental health disorders or are planning suicide. Most life insurance companies screen applicants for mental health conditions, like depression and anxiety, before they are approved for coverage. And while you may pay a higher premium if you are living with a mental health condition, you will still most likely be able to get a life insurance policy. In the case of physician-assisted suicide, the same rule applies. If you live in a state where assisted suicide is legal, you must pass the two-year period before you can claim death benefits.

Denial of your claim due to criminal activity may include drug-related offenses, participation in gangs and some traffic fatalities if you are found to be at fault. Some insurers, for example, may deny your claim if you are killed in an accident and are found to have been driving under the influence at the time of the accident.

Extreme sports, such as BASE jumping, car racing, paragliding and even hot air ballooning may also result in a denial of claim, but this will vary depending on your insurer. As always, it’s a good idea to read your policy documents over and ask questions of your agent if you are not sure of the details of your coverage.

Accidental death policy exclusions

Some life insurance policies, known as accidental death policies, only provide coverage for the insured if they die due to an accident. Causes of death related to illness, medical issues or chronic health conditions are not covered. Generally, accidental death policies are more affordable than other types of life insurance, which is also sometimes called all-causes, or standard, life insurance. Accidental death policies will define what constitutes an accident and may include exclusions due to death from:

Illegal activity: When someone dies as a result of illegal activity, their beneficiaries likely cannot claim their death benefits. This includes everything from drug deals gone wrong to DUI crashes.
Risky activity: Any death due to risky activities, such as skydiving or rock climbing, are usually counted as an exclusion.
Substance abuse: If a policyholder’s death is the result of drug or alcohol abuse, it may be excluded from their policy.

It’s also worth noting that risky hobbies, substance abuse and misrepresentation (providing false information on your application) could bar you from getting coverage in the first place or subject you to a higher premium.

Is a life insurance exclusion and clause the same thing?

These two terms are sometimes used interchangeably, but they actually have different meanings. A clause contains a provision that may provide protections to the policyholder. An incontestability clause, for example, limits the insurer’s ability to deny a claim. A grace period clause allows some time for the premium to be paid after the due date.

An exclusion, on the other hand, typically protects the carrier by allowing it to deny coverage for a particular reason. So, a suicide exclusion, for example, would deny the payout of a claim to beneficiaries if it occurs within a certain period of time after the purchase of the policy.

Additionally, life insurance policies have a contestability period, in which life insurance companies can investigate your application and deny claims. This period is typically one to two years from the effective date of the policy. If you pass during the contestability period and the insurer determines you misrepresented yourself or provided any false information to your life insurance company, it could completely void your coverage, and no death benefits will be paid.

How do I know if I have life insurance exclusions on my policy?

Knowing what your life insurance covers may be vital. After all, some types of life insurance are designed to cover you for your entire life — which means making premium payments for your entire life, too. As such, not understanding your life insurance exclusions could prove to be a costly mistake.

One way to learn more about the exclusions on your life insurance policy is to read through your contract. Although it may be dense, your contract will spell out precisely what is and isn’t covered on your life insurance policy. However, life insurance is complex, and contracts may be hard to decipher. With that in mind, it may be a good idea to meet with an experienced life insurance agent, so they can break it down for you.

Do life insurance exclusions change over time?

Over the years, life insurance companies have altered their definition of risky behavior based on global, economic and socially driven changes. For instance, some life insurance companies used to exclude private aviation from the list of covered causes of death. However, as private aircraft became safer, many life insurance companies eased up on the rules for most policyholders.

It’s important to note that although some circumstances and health statuses may not be exclusions on your life insurance policy, they could be risk factors that may contribute to a higher premium. Additionally, every insurance company and policy is different, so it’s important to read through your contract to understand your policy limitations.

Frequently asked questions

Generally, no, exclusions should not have a direct impact on the cost you pay for most types of policies. Other factors, such as your age and health, play a role, however. It is true, however, that accidental death policies, which contain many exclusions, may be lower in cost than traditional permanent or term policy types.
People who engage in hobbies or activities deemed risky may still be able to secure life insurance coverage. While some life insurance companies may decline to extend coverage to a high-risk individual, other companies may offer a policy at a higher premium or offer a policy with an exclusion if death results from the specific activity. Separate from life insurance, you may also be interested in an insurance policy specifically for adventure sports and travel. Activities deemed high-risk may include BASE jumping and race car driving, but some professions like loggers and steel workers will also fall into the high-risk category. Speaking with your life insurance agent openly about your occupation and hobbies can help you secure the right type of life insurance for you and your family.
Life insurance exclusions are included in full policy language that you receive when you purchase a policy. Before you purchase life insurance, you can ask your agent to review all policy exclusions with you. If you have any questions about what’s covered, you may want to contact your agent who can walk you through the details of your policy.
Most insurance policies include a suicide clause that states the policy will not pay out the death benefit if the policyholder commits suicide within a certain period of time after the policy is purchased. Typically, the exclusionary period is two years, but it can vary between insurance companies. In the event of a policyholder’s suicide within the exclusionary period, the life insurance company will usually refund the premiums paid on the policy. If you or a loved one struggles with suicide ideation, we urge you to contact the Suicide & Crisis Lifeline by dialing 988 anywhere in the U.S.