Exclusions Under a Money-Back Plan

A clause is an essential part of the insurance contract because it contains a certain provision to secure the interests of the life assured and the insurer. The provisions contain particular conditions regarding the payouts.

Similarly, exclusions are a type of clause that tells us about what is not covered by the policy from the beginning. For instance, the life assured’s spouse will not be covered if they opt for an individual life insurance policy. This non-coverage comes under insurance exclusions. However, insurance companies mention the number of dependents that can be covered in their term life insurance plans, monthly income plans, and whole life insurance plans.

Exclusions Under Money-Back Plans

Different plans offer different exclusions and clauses. To find out some common money-back exclusions and clauses, read the following.

1. Grace Period

The grace period ensures that the insurance will not be canceled if the premium is not paid on time. Instead, the policyholder will be given a set of deadlines within which to repay the overdue payment without incurring any penalties. 

Depending on the contract type and premium payment method, the grace period is normally between 15 and 30 days. If the policyholder dies during the grace period as a result of an unfortunate incident, the policyholder's beneficiaries will be paid the sum assured after the pending premium amount is removed from their payout amount.

2. Free Look Period

Another benefit to the policyholder is the Free Look period. The clause specifies that if the policyholder is unhappy with the policy's terms and conditions, they may return it for cancellation. After a few necessary deductions, the complete premium money will be returned to the individual. Medical and fitness test fees, stamp duty, and the proportionate risk premium for that period are all included in the charges.

The cancellation notification for such a policy must be given within 15 days of the policy's issue. The free-look period is 30 days if you find a good life insurance policy in India and purchase it online.

3. Revival Clause

For both the insurance company and the insured, the revival clause is a win-win situation. The revival clause permits the life insurance policy to be reinstated if it has lapsed owing to non-payment of the premium amount. The policyholder will be required to pay the full amount of the premium due, as well as interest charges.

For the policy to be revived, the insurance company may additionally require a fresh fitness and medical certificate. The policy will be restored from the date of payment of the pending premium amount if all terms and conditions have been met.

4. Suicide Exclusion Clause

One of the most popular life insurance clauses is the exclusion of suicide. The suicide clause stipulates that if the life assured commits suicide within the first 12 months, their beneficiary will get 80% of the total premiums paid up to that point.

In the event of such a disaster, some insurance firms may be forced to surrender the entire amount. After a year, if the life assured commits suicide, the insurance company is obligated to pay the sum assured to the beneficiaries.

Conclusion

Different money-back plans offer different exclusions and clauses. However, there are some common exclusions and clauses that are provided by all the money-back plans. These include a grace period, free look period, revival clause, suicide exclusion clause.

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Disclaimer: This article is issued in the general public interest and meant for general information purposes only. Readers are advised not to rely on the contents of the article as conclusive in nature and should research further or consult an expert in this regard.