Life insurance is designed to provide financial protection to you and your loved ones — especially if you become totally and permanently disabled or if you pass away. But it’s just as important to understand what life insurance doesn’t cover, because exclusions determine when a policy won’t pay benefits even if a claim is made.
How can life insurance help you or your dependents?
Life insurance will provide a lump sum to you or your beneficiaries in the event that: 1) you totally and permanently lose your physical ability and become unable to earn income, or 2) pass away.
The payout can be used for any purpose and can help you get the necessary treatment and maintain your living. Should you pass on, the lump sum will be paid out to your dependents (or other named beneficiaries), relieving their financial burden while they cope with your passing and look for other means of income.
But pay serious attention to cases where your life insurance won’t cover. These cases are called exclusions.
What Are Exclusions?
“Exclusions” are situations or events that your life insurance policy explicitly does not cover. They are part of every life insurance contract and protect insurers from bearing risks they never agreed to insure. Before signing any policy, it’s essential to know what is excluded so you’re not caught off guard when filing a claim later.
These are some other common “exclusions” in life insurance that you should know.
1. Pre-existing conditions
Here are some standard exclusions that appear in most life insurance policies in Malaysia and globally:
1. Pre‑Existing Conditions
Pre‑existing medical conditions refer to health issues that existed before you bought the policy, such as heart disease, diabetes, epilepsy, or cancer. If not disclosed or accepted by the insurer during underwriting, claims related to these conditions may be denied.
Note: Some policies may cover pre‑existing conditions after a waiting period or with higher premiums, but this depends on the insurer’s underwriting. Always read the policy wording carefully.
2. Suicide and Self‑Inflicted Harm
Most life insurance policies exclude payouts if death is due to suicide or intentional self‑harm, especially within the first 12–24 months of the policy’s start. In many cases, insurers will only return premiums paid instead of paying a death benefit.
3. Dangerous Activities and High‑Risk Hobbies
If your disability or death happens from activities considered high risk — like professional motor racing, skydiving, scuba diving, or other extreme sports — some insurers won’t pay the benefit unless the activity is declared and accepted with extra premium or rider coverage.
Some insurers will not pay any total and permanent disability benefit, should your disability be directly or indirectly caused by engagement in:
- Extreme professional sports such as:
- Scuba diving
- Racing
- Aerial flights (other than as a: 1) crew member, or 2) passenger on a licensed passenger-carrying commercial aircraft)
- Dangerous activities such as:
- Bungee jumping
- Parachuting
- Sky-diving
Scenario:
After being homebound for a few months, Elly went sky-diving in Langkawi for a weekend getaway. Her holiday turned into a tragedy as she forgot to slow down on landing, disabling both of her legs when they came into contact with the ground. Unfortunately, Elly couldn’t get any total and permanent disability benefits from her insurance.
What happened to Elly could happen to anyone. Before you think about participating in extreme professional sports or doing dangerous activities that could risk your life, please read your policy fine print as they may be exclusions under your policy.
4. Illegal Acts or Criminal Behavior
Benefits may be denied if disability or death occurs while you’re involved in illegal activities, such as riots, insurrections, or criminal offenses. Policies usually include this to discourage unlawful conduct and avoid claims arising from criminal acts.
Policyholders will also not receive any total and permanent disability benefit, should their disability be directly or indirectly caused by their involvement in illegal activities. These include:
- Invasion
- Civil war
- Insurrection
- Revolution
- Riot
Scenario:
Linda took part in a riot. She sustained a severe injury from physical assaults during the riot. Her injury worsened and permanently disabled both of her arms. Linda couldn’t get any total and permanent disability benefits from her insurance as the disability was a result of her involvement in the riot, which is part of her life insurance exclusions.
Carefully think about the risks of participating in any activities. You don’t want to lose any benefits from your insurance, especially after spending your hard-earned money on your insurance.
5. War, Terrorism, and Civil Unrest
Many traditional life insurance policies exclude claims resulting from war, terrorism, invasion, rebellion, or riot — especially if you voluntarily participate or are in designated conflict zones. Some specialised riders may offer coverage for such risks at additional cost.
6. Fraud and Misrepresentation
If you withhold information or provide inaccurate answers during the application process — especially about your health or lifestyle — the insurer may deny the claim or even cancel your policy. Full and honest disclosure when applying is crucial.
7. Death Under Influence of Alcohol or Drugs
Some insurers may exclude death benefits if the insured dies under the influence of alcohol or non‑prescribed drugs at the time of the incident. This depends on the policy wording but is a common clause in many life and accidental death policies.
What This Means for You
Understanding exclusions helps you:
- Avoid surprises — so you know when coverage applies
- Manage expectations — especially for risky hobbies or health conditions
- Ask the right questions — before signing a contract
Reading the fine print and asking your adviser to explain exclusions in plain language is one of the most valuable steps you can take before purchasing life insurance.
Conclusion
Life insurance offers important financial protection for you and your loved ones, but like every contract, it has limitations. The most common exclusions typically relate to pre‑existing conditions, self‑harm, illegal acts, dangerous activities, and situations like war or criminal behaviour. By understanding what is not covered, you can make more informed decisions.
If you’d like help comparing life insurance options and reviewing policy exclusions, BJAK’s advisors can walk you through the details so you understand exactly what your coverage includes — and what it doesn’t.
