When the individual buys a policy from a life insurance company, the two parties - the policy buyer and the insurer, enter into an agreement. The insurance company promises to pay the policyholder or their family an assured sum in return for the regular and timely premium paid by the policyholder. The agreement forms a substructure of the insurance contract. Like any other contract, the life insurance contract also has several clauses as well as insurance exclusions.

What are Clauses and Exclusions?

A clause is an important part of the insurance contract as it contains a specific provision to safeguard the interests of the policyholder and the insurance provider. The provisions contain specific conditions regarding the payout and the cancellation of the contract.

Similarly, exclusions are a type of clause that dictate what is not covered by the contract. For example, the policyholder’s spouse will not be covered if the policy buyer opts for an individual life insurance contract. The non-coverage of a spouse comes under insurance exclusions. However, insurance companies mention how many dependents can be covered in their term life insurance plans, monthly income plans and whole life insurance plans.

Important Clauses and Exclusions One Should be Aware of

Quite a few clauses, like the war clause, have now become irrelevant and extinct. Let us now understand the major life insurance clauses and the general exclusions in insurance that benefit the policyholder-

 

1. Grace period
   
   

   The grace period dictates that the policy will not be forfeited in case of missed premium payment. Instead, the policyholder will be provided with a certain timeline to make the pending payment without facing any penalty. The grace period is usually between 15 days and 30 days, depending on the type of the contract and the premium payment mode. If an unfortunate event leading to the death of the policyholder occurs during the grace period, the policyholder’s beneficiaries will be paid the sum assured after the pending premium amount is deducted from their payout amount.
   
   

2. Free Look period
   
   

   The Free Look period is another clause that benefits the policy owner. The clause states that if the policyholder is dissatisfied with the terms and conditions of the policy, they can return the policy for cancellation. The entire premium amount will be paid back to the individual after deducting a few essential charges. The charges include the medical and fitness test fees, stamp duty charges and the proportionate risk premium for that period.
   
   The notice for the cancellation of such a policy is within 15 days from the issuance of the policy. If you choose a suitable life insurance policy in India and purchase it online, then the free-look period is for 30 days. Even monthly income plans in India have a free look period.
   

 

3. Revival clause
   
   The revival clause acts as a win-win situation for the insurance company and the policyholder. If the life insurance policy lapses due to the non-payment of the premium amount, the revival clause allows the reinstatement of the policy. The policyholder will have to pay the entire premium amount that is due along with certain interest charges.
   
   The insurance company may also demand a new fitness and medical certificate for the revival of the policy. After all the terms and conditions are satisfied, the policy shall be restored from the date of payment of the pending premium amount.

 

4. Suicide exclusion clause
   
   

   Suicide as exclusion is one of the most common life insurance clauses. The suicide clause states that if the life assured dies by suicide within 12 months, their beneficiary will be awarded 80% of the total premiums paid until that day.
   
   Certain insurance companies might entirely forfeit the entire amount in case of such a misfortune event. If the life assured dies by suicide after 12 months, the insurance company will have to pay the sum assured to the beneficiaries.
   

Does the Exclusion Vary Depending on the Policy?

Yes, the insurance exclusions are different for different policies. In some policies, the spouses might not be covered, while others will exclude certain events such as death due to an aviation accident. However, all this changed as people now can get extra coverage by availing the rider^# benefits. Most variation in the terms and conditions can be seen in the monthly income plans in India, as there are numerous such plans.

What are Some Other Clauses and Exclusions?

There are a few other clauses such as the nomination of the beneficiary, assignment of rights in the policy and exclusions for additional riders or rider benefits. Nevertheless, one should be aware that the terms and conditions are not the same for all the policies. There is a contestability clause that allows the insurance company to question the claims filed by a policyholder’s beneficiaries if the policyholder passes away within two years of the inception of the policy.

 

Conclusion

It is the duty of the policyholder to read the terms and conditions thoroughly before purchasing the insurance policy. The individual should also review their policy once every few years to ensure that all the requirements are fulfilled.

Tata AIA Life Insurance offers complete transparency and reliability regarding all the policy guidelines, clauses, and exclusions. We have a seamless Tata AIA premium pay process for policy purchase or renewal and quick claim settlement. All the clause and the general exclusions can also be found on the Tata AIA website.

L&C/Advt/2021/Jul/1143