Life Insurance Exclusions
When it comes to buying insurance, one of the biggest concerns is encountering disputes during the claims process, where the policyholder and the insurance company disagree and the compensation cannot be obtained smoothly. Among the many insurance products, life insurance disputes may be relatively rare because the coverage of different plans is quite consistent. However, there are still some general exclusions that need to be noted in life insurance.
General Exclusions of Life Insurance
When the insured person passes away, the life insurance benefit will be paid to the beneficiary. Unlike medical insurance, there are no requirements for medical needs or whether a disease already exists when claiming life insurance. Death is death, and there seems to be no room for dispute in basic life insurance compensation. However, insurance companies can still refuse to pay in certain situations.
In addition to death due to illness or accident, the vast majority of life insurance policies in the market will compensate for death caused by the following circumstances:
- HIV and AIDS
- Illegal activities
- Overdose of drugs, alcohol, and narcotics
- Armed forces
- Nuclear, biological, and chemical activities
- War and terrorism
- Suicide
It should be noted that in order to reduce the moral risk of people with suicidal tendencies using suicide to obtain compensation, insurance companies usually have additional clauses regarding “suicide clauses.” For example, with Bowtie Term Life Insurance, if the insured person commits suicide within the first year of the policy’s effective date, no compensation will be paid. However, after this period, “suicide” will also be removed from the list of “exclusions.”
(Please note: For all life insurance applications submitted on or after September 13, 2024, the suicide exclusion period will be changed to 2 years. Ensure that the personal information of the policy owner and the insured person is correct when submitting the application. If the submitted information is incorrect, you may need to resubmit the application. Please pay attention to the latest revised terms at that time. All terms and conditions are subject to the policy provisions of the issued policy. For a detailed explanation of the rationale behind this change, please refer to the accompanying article.)
Other Reasons for Life Insurance Claim Rejection
Like other insurance products, if the policyholder fails to pay the premiums on time before the premium grace period, the insurance company has the right to terminate the policy and refuse to pay any compensation.
On the other hand, if the policyholder deliberately conceals their health status and medical history during underwriting, even if these facts have nothing to do with the cause of the insured person’s death, the insurance company can still refuse to pay the claim on the grounds of “non-disclosure of material facts” without refunding the premiums already paid.
Therefore, to avoid possible delays or rejection of claims, it is important for the policyholder to pay premiums on time and honestly fill out the health declaration form.
What if the insurers reject claims without proper reasons?
If the policyholder believes that the insurance company’s refusal to pay compensation is unreasonable and an appeal to the insurance company does not reach a consensus, they can consider submitting the case to the Insurance Complaints Bureau for handling.
The Insurance Complaints Bureau will handle relevant complaints in the form of arbitration for disputes involving amounts of HK$1 million or less. The complainant needs to bring copies of relevant documents, including the entire policy document, insurance application form, written notice of the insurance company’s final decision, claim form, medical report, etc., to enable the Bureau to make the most fair and objective judgment.
If the amount of compensation involved exceeds HK$1 million, the policyholder will need to resort to the judicial process to resolve the claims dispute.
