When you buy life insurance, you enter into an agreement with the insurance company as a policyholder. According to the agreement, a policyholder states that they will pay regular premiums to the insurance company. In return, the insurance company will provide a sum assured to their loved ones in case the policyholder loses their life. While the basic crux of life insurance is the same, the details vary depending on the type of life insurance you buy. Similar to any other agreement, a life insurance agreement also has several clauses and exclusions. Here are the common inclusions and exclusions of a life insurance policy.

Key clauses and exclusions of a life insurance policy

A clause is a specific provision that is mentioned in the insurance contract to safeguard the interest of both, the policyholder and the insurance provider. Exclusions are also a type of clause that dictate things that are not covered by the life insurance policy. Read further to know the important clauses and exclusions of a life insurance policy:

Free look period

A free look period is a clause that directly benefits the policyholder. It states that if the policyholder is dissatisfied with the terms and conditions of their policy, they can issue a cancellation for the same. The premium amount that the policyholder paid during the purchase of the plan will be paid back to the policyholder. There might be some essential charges deducted, but the rest of the amount will be given back to the policyholder. The free look period is usually 15 days, and if the policyholder wants a return of their premium, they are required to cancel the policy within 15 days of purchase. For the life insurance plans that are purchased online, the free look period is of 30 days. When you are buying a life plan, it is always advisable to use tools like a life insurance calculator and compare several plans before buying one.

Grace period

A grace period is an extended time that a policyholder gets for paying their missing premium. The life insurance company will not forfeit the policy if the policyholder manages to pay the premium within the grace period. This clause is helpful for the policyholder as it gives time to them for arranging the premium payment. A grace period is usually anywhere between 15 days to 30 days. Ensure that you pay your premiums on time to keep your desired life cover intact.

Suicide exclusion clause

Suicide is a common exclusion from most life insurance policies. A suicide clause usually states that if the policyholder commits suicide within 12 months of the purchase of a policy, the nominee will receive only 80% of the total premiums the policyholder had paid until that day. Some life insurance companies might even forfeit the entire amount if the policyholder had committed suicide. If the policyholder commits suicide 12 months after the policy purchase, the nominee will receive the life cover from the insurance company.

Revival clause

A revival clause benefits both, the life insurance company as well as the policyholder. If a life insurance policy has lapsed due to the non-payment of premium, the revival clause allows the reinstatement of the policy. In case the policy is reinstated, the policyholder is required to pay the entire premium amount along with some interest charges. The life insurance company may also ask for a new medical certificate if they feel the need. Once all the terms and conditions are cleared, the policy will be restored from the date the pending premium was paid. When you buy a life insurance plan, you must choose premiums which you can easily pay throughout the policy duration. Use a life insurance calculator to get an estimate of the premium you need to pay for your desired sum assured.

Apart from the main clauses and exclusions mentioned above, several others might be mentioned in your life insurance policy. You must read the fine print and know about all the inclusions and exclusions before signing up.

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