Every customer would like to expand policy benefits to cover all possible losses. But restrictive clauses redefine benefits and help protect insurer’s interests. Product brochures and publicity materials also do not carry these details.

But insurers are very clear about the restrictions and exclusions they place on benefit entitlements. Reading the life insurance policy enables the customer to know these conditions. .

RISK OF DEATH

Most life insurance policies cover losses arising out of the risk of death. But we should understand the restriction on nature of death.

Death due to suicide within one year of commencement of risk is not covered. So the restrictive suicide clause in reality redefines death as ‘death by any cause other than suicide in the first year of the policy.’

ACCIDENT BENEFIT

Accident benefit under a policy provides for benefits as defined in each company’s policy conditions. LIC’s accident benefit, for instance, is available on two events – one, on death in an accident and two, on policyholder surviving the accident but with permanent disability. In the former case, the benefit is paid in the form of an additional sum assured along with death claim.

In the latter, future premiums are waived and an additional sum assured is paid to the policyholder in 120 monthly instalments (ten years). The restrictive conditions are (i) the accident should have resulted in permanent disability (ii) this should occur within 180 days of the accident (iii) it shall not be deliberately caused (iv) the accident should not have occurred while the policyholder was engaged in any illegal or anti-national activity.

RESTRICTIVE CONDITIONS

Different companies define benefits and restrictions thereon differently. But the customer should learn that generally there are restrictions pertaining to (i) cause of death (ii) period within which death/disability shall take place and (iii) amount of benefit. Total amount of accident benefit available to an individual is restricted to a specified amount and this limit is inclusive of all claims available from all life insurance companies on individual and group policies. So, the policyholder must provide details of all his insurance policies, including group insurance cover, from all insurance companies in the proposal form. If he has not disclosed details of his insurance cover, the insurer is not at fault. Had it been disclosed, the insurer would have collected accident benefit premium only for the sum that was allowed under accident benefit.

EXCLUSIONS

Insurer’s liability to pay claim under accident benefit is excluded in case the death/disability is caused by intentional self injury, attempted suicide, insanity or immorality or while the life assured was under the influence of liquor or drugs. The same exclusion applies to the life assured engaged in aviation or aeronautics in any capacity other than that of a fare-paying passenger. Non-payment of premiums within days of grace allows the policy to lapse and no benefit flows from such a policy. In joint life policies, the availability of policy benefits on the second life in case one life dies is subject to restrictive conditions. In some cases, the policy itself is terminated on death of one life. Unlike in life insurance, there could be repeated health insurance claims on the same life. Moreover, health insurance in India is in its early stage; greater caution is exercised by insurers. Hence, there are restrictions on minimum number of hours/days hospitalisation, for claiming daily cash benefits for illnesses (not for accidents). For major surgical benefits, a lot of exclusions on system of medicine, hospitals and surgical procedures are provided.

(The author is President, Society for Promotion of Legal and Insurance Awareness. Contact: >lifeinsuranceinsights@gmail.com )

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