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As an insurer, Allianz Life Insurance Malaysia Berhad (“Allianz Life”) wants to create awareness on the importance of understanding Exclusions in insurance policies before purchasing one. It realises the need to not only provide results for customers but also to the general public alike. 

“Exclusions are part of any Life and Health insurance policy purchased; which is a practice throughout the whole insurance industry. Exclusions are basically risks that are not covered by the insurer. Common standard Exclusions in a basic Life insurance policy under the Total Permanent Disability (“TPD”) contract are ‘fraud, war, riot and civil commotion’. In a nutshell, if the TPD occurs as a result of these acts or due to these events, the insurance benefit will not be payable. On the other hand, under a basic Health insurance policy, common Exclusions include pre-existing conditions, cosmetic surgery, dental care and treatment for pregnancy among others. 

When purchasing a policy, people should never take Exclusions for granted so that it does not affect their claims process in future,” said Ho Ai Mee, Allianz Life’s Head of Underwriting.

According to Ho, some of the Exclusions that are commonly taken for granted when a customer purchases a policy - whether Life or Health insurance - are where pre-existing conditions and/or specified illnesses are not covered when they occur during the waiting period. The waiting period usually commences from the date the policy is issued or reinstated. These standard Exclusions will be clearly stated in the policy contract.

However, another common Exclusion taken for granted are the ones imposed during the underwriting process. This is also an Exclusion which is practiced in the insurance industry. The difference is that this specific Exclusion is imposed on an individual contract due to the individual’s health condition, occupation and avocation among others - depending on the degree of risks involved. For health condition, several factors will be considered before the Exclusion is imposed but mainly, it will be on the prognosis of the medical condition and possible recurrence.  Another difference between a standard Exclusion in the contract and the specific Exclusion is that when a specific Exclusion needs to be imposed, the insurance company will send a Conditional Acceptance letter to the customer to inform on the Exclusion. If the customer agrees to the Exclusion, he/she needs to provide consent by signing on the reply slip of the Conditional Acceptance letter. This letter will then be attached to the policy contract as proof of the consent. Sometimes, this specific Exclusion can be removed once the risks no longer exist. An example is that if the life assured’s health condition has improved for some time, and there will not be any possible recurrence, he/she can request for removal of this specific Exclusion from the contract.

“To ensure that the Exclusions are understood, an agent plays a vital role. The agent needs to explain all the Exclusions to the customers as most customers do not have knowledge of the type of Exclusion imposed. If customers are still unsure, they must ask questions to their respective agent or insurer to avoid any frustrations later,” continued Ho.

If people purchase a policy innocently without realising about an Exclusion, and when a Claim falls under the particular Exclusion, claims will not be payable according to the terms and conditions of the contract. This is the reason Exclusions are always important to take notice. 

“Insurance is important for everyone, however, it is even more important to understand the policy that is being purchased and that it is suitable for you. As such, always remember to read the fine print and ask questions to your respective agent or insurer especially on Exclusions if unsure,” concluded Ho.