What are ‘exclusions’ and ‘limitations’ and how do they affect my life insurance coverage?
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UPDATED: May 2, 2012
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An “exclusion” is a statement in an insurance policy which describes a condition or type of loss that is not covered by the policy. In life insurance, a common exclusion is an exception for accidental deaths caused by “act of war” or “while in active military service”.
Since exclusions and limitations “take away” some of the coverage of the policy, the law requires that they be clearly written and very specific. In the event of a reasonable difference of opinion over how to interpret the meaning of an exclusion or limitation, a court generally will resolve the dispute in favor of the policyholder by adopting the narrowest or most restrictive interpretation.