Expert Guide to Exclusions

When you are going through a life insurance quote request and life insurance comparison, it is important to know generally all deaths (except suicide in the first 13 months) are covered when it comes to insurance products offered by Financial Advisers.

Select Direct Insurance Products may exclude suicide and pre-existing medical conditions for several years from the time of the policy application. In select cases, a life insurance company may put in place an exclusion on your policy.

This life insurance guide will help to answer some of the questions around exclusions, including:

  1. Definition
  2. What are my options?
  3. What if I have an existing exclusion on my policy?
  4. What if I have a pre-existing medical condition?
  5. What do I do if I have had a claim denied due to an exclusion?
  6. Policy reviews
  7. General Exclusions & Case Studies

Definition

An exclusion is something that is unable to be covered under your life, trauma, TPD or income protection policy. If you have one in place, you will never be able to make a claim if your claim is a result of that particular exclusion. However this may be reviewable and it may be able to be removed from your policy after 12 months.

What are my options?

If you have recently applied for a life insurance quote and you have had an exclusion put in place, there are a number of steps you can take:

  1. Ask your adviser to contact other companies they work with and to obtain their view on your exclusion.
  2. Find out from your adviser when your policy is reviewable. This may be in 12 or 24 months or at a specific time for example when you return back from a holiday or when you have fully recovered from an injury or sickness.

What if I have an existing exclusion on my policy?

It is important to know this can potentially be in place for the life of the policy. Generally, exclusions are reviewable every 12 months, which allows your adviser to approach their insurance partners to find out if your exclusion is reviewable and if it can either be removed from your policy.

What if I have a pre-existing medical condition?

If you are concerned about how this may impact on your application there are a number of steps you need to follow. Once you have undertaken these steps you should ask your adviser about when your pre-existing medical condition may be reviewable and as if there is a positive change in your condition, if the exclusion can be removed from your policy.

What do I do if I have had a claim denied due to an exclusion?

If you have recently lodged a claim request which has been denied due to an existing exclusion, it is important to make sure you followed the correct claims procedure outlined on our lodging a claim page. It is also important to speak to your adviser about the declined claim, why it occurred and make sure that it is consistent with the exclusion that is in place.

Policy Reviews

Your exclusions may be reviewable depending on the type of exclusion you have in place. If you would your exclusion reviewed, please contact us and we can approach your life insurance company to find out if the exclusion is reviewable.

General Exclusions and Case Studies

War & Terrorism:

Case Study:Jill and Alan have recently married and have booked their honeymoon for Bali. Due to their marriage, they decide to take out life and trauma insurance policies to protect them in case of death, terminal illness or a trauma event. As they have already planned and booked their holiday, their insurers place a war & terrorism exclusion on their policy as they are travelling to Bali at a time when the DFAT has a “reconsider your travel warning” in place, due to recent acts of terrorism.

This means that if Jill and Alan were to pass away or become terminally ill due to a war and terrorism activities while in Bali, they would not be covered under their policy. The war & terrorism exclusion generally excludes coverage in countries which have a certain Department of Foreign Affairs and Trade (DFAT) warning. Generally, life insurance companies will exclude claims due to the following:

  • War or hostilities (whether war is declared or not)
  • Civil War, Rebellion, Revolution, Invasion, Insurrection by any military or usurped power, mutiny, civil unrest or riot
  • Participation in any armed forces or peace keeping activities; or
  • Any act of any person or persons acting on their own or on behalf of or in connection with any group or organisation to influence by force, any persons or group, corporation or government by terrorism, kidnapping or attempted kidnapping, attack, assault or any other violent means or acts

The Spine:

Life Insurance companies may apply exclusion or an extended waiting period for certain back conditions.

Life Insurers will be alerted to a history of ‘back disorder’ by the mention of any condition of or treatment to any part of the back or neck. The insurer will generally ensure that they have sufficient medical information via your Personal Medical Attendance Record (PMAR) and Questionnaire to have an understanding of the past and present state of the condition. Where it is practical and reasonable to do so based on the medical and occupational information the insurance company may be able to limit the exclusion to one of three areas of the spine:

  • Neck or middle back; or
  • Lower = Lumbar Sacral; or
  • Full Back Exclusion

Case Study:Bill decides to take out a TPD insurance policy as he has recently bought a house and wants to make sure he is able to meet the repayments as well as paying other debts if he becomes totally and permanently disabled and unable to work. While going through the application, in complying with his duty of disclosure.

Bill informs his adviser (and his insurance company) that he suffers from a back condition which is the result of a rugby injury, which causes him immense pain. As a result of this disclosure, his insurance company decide that they will exclude all back conditions from his trauma policy. Four years after taking out his policy, on a regular check up with a medical practitioner, he is informed that his back condition has improved and has almost healed. Upon hearing this news, Bill contacts his adviser and finds out that his exclusion can be reviewed in two months time on his policy anniversary. In his review, Bill’s insurer requests a Personal Medical Attendance Report from his doctor as well as additional medical information from his doctor and specialists, including:

  • The type of condition Bill has
  • Date of diagnosis
  • Cause
  • Recurrence
  • Severity
  • Treatment
  • Co-existing conditions
  • Date of last treatment or symptoms
  • Any time off work

As his specialists and doctor agree that he is symptom and treatment free, his insurer agrees to remove his back exclusion from his policy, allowing Bill to claim for any trauma conditions which are caused by his back.

If you would like more information on exclusions and how to deal with them when applying for life insurance, contact Life Insurance Direct on 1300 135 205.

Published: June 24, 2013

Ask an Expert?

3 Comments

  • Dean |

    Hey Team,

    What are all the exclusions with a TPD Insurance Policy and when will you see your claims rejected as such?

    Cheers!

    • Brett Lenertz SPECIALIST
      Brett Lenertz |

      Thanks for contacting us Dean, with regards to your question around exclusions with TPD Insurance and its impact on claims we will look at TPD Insurance within two areas.

      First of all to be eligible for claim you have to meet the Insurer’s definition within the PDS. TPD Insurance is generally available across various options being Own Occupation, Any Occupation, Home Duties & Modified (Activities of Daily Living) and therefore these categories are defined differently within the PDS and will vary amongst Insurers. Remember, generally speaking to be eligible for a claim on TPD Insurance you have to be disabled continuously for a minimum of three to six months, solely because of the injury or illness. You will have to check with your Insurer in regards to their definition.

      Secondly, it is possible that a TPD policy can have an exclusion based on what a person disclosed during the application to take out a policy. Therefore, the Insurer will issue a TPD Policy but exclude areas in which the policy holder can make a claim for in the future. This would be made apparent on the policy schedule and made aware to the life insured before they choose to accept the cover with the exclusion applied. Sometimes exclusions can be reviewable in the future so it can be worth making contact with the Insurer to discuss the situation later on while they hold the TPD Policy.

      Keep in mind, claims may also be rejected if for example the life insured did not fully disclose their medical history during the Duty of Disclosure and the Life Insurance Company sees discrepancies between their medical file and disclosed health information during the application process.

  • Sr M Langeveld |

    Good day

    I am a 47 year old female. Occupation Registered Nurse. I have updated my life insurance policy with Sanlam lately. I am a insured member with them for 10years now, never had any exclusions. Now I declared on the telephonic interview that I was treated for neck spasms. So they requested all tests done on my neck. X-ray and MRI. MRI summary shows degenerative changes with involvement on levels C3 to C7 with close nerve root approximation. I do not have any other symptoms but neck spasms when I am working on the computer a lot. Now Sanlam except to update my life insurance with a exclusion of the whole spine. They don’t even have x-rays or anything of the rest of the spine. I am still working and very active. No neurological outfalls in any way currently. What is the criteria used to decide on a exclusion? Can they exclude the whole spine without having any investigations done?

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