The insurer will pay nominee the sum assured/death benefits if an insured event occurs as per the terms and conditions of the life insurance plan. Insurers want to protect themselves and avoid losses. This is why insurers have exclusions to protect themselves. Exclusions are events/conditions which are not covered under the life insurance plan.
Insurers do not cover risk arising out of man-made disasters. This is because man-made disasters are expected to affect a lot of policyholders at the same time. Example of man-made disasters are a war or a riot.
Before sanctioning your insurance policy, your lifestyle-related habits will be checked by the insurance companies. Companies ask the policyholder if he has a smoking habit. This is because smoking is injurious to health and it can cause the death of the policyholder, quite early. Insurance companies fix higher premiums for smokers because they believe that smokers make more claims than non-smokers.
While availing an insurance policy, if the smoking habit is not mentioned by the policyholder and he passes away due to a smoking-related disease, the insurance company will deny the claim. If the policyholder has a drinking habit, he should inform the company at the time of applying for the life insurance policy. This helps the insurance company fix/decide the proper premium amount.
Your insurer will not cover the risks you intentionally get into and which lead to violations of the law (criminal acts). By getting into such acts, you are taking a risk which might harm you. But, the insurance company covers the risks which are accidental and unexpected.
Suicide and self-inflicted injury:
Suicide will be included in every term insurance plan’s exclusion list. If the policyholder commits suicide within one year of commencement of the policy, nominees will not receive insurance claim money and any other benefits. Suicide exclusions clause will also be included in group insurance plans.
HIV or sexually transmitted diseases
The insurance claim will be rejected by the insurer if the insured dies because of HIV or any sexually transmitted disease.
Insurance companies will not cover the risk arising out of adventure sports activities like rock climbing, auto racing, bungee jumping, skydiving and so on. Those risks are not covered because the policy holder is aware of the risks and is getting into the act, knowingly.
Illegal drugs or abuse of medicine dosage
The insurance claim will be rejected by the insurer if the policyholder dies due to consumption of intoxicating drugs or abuse of medicine dosage other than the prescribed limit.