30 January 2015, KualaLumpur

Allianz Malaysia Berhad (12428-W) 9/2/2015

Allianz Life – Understanding Exclusions in insurance policies is important

As an insurer, Allianz Life Insurance Malaysia Berhad (“Allianz Life”) wants to create awarenesson the importance of understanding Exclusions in insurance policies before purchasing one. Itrealises 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 practicethroughout the whole insurance industry. Exclusions are basically risks that are not covered bythe insurer. Common standard Exclusions in a basic Life insurance policy under the TotalPermanent Disability (“TPD”) contract are ‘fraud, war, riot and civil commotion’. In a nutshell, ifthe TPD occurs as a result of these acts or due to these events, the insurance benefit will not bepayable. On the other hand, under a basic Health insurance policy, common Exclusions includepre-existing conditions, cosmetic surgery, dental care and treatment for pregnancy amongothers. When purchasing a policy, people should never take Exclusions for granted so that it doesnot 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 customerpurchases a policy - whether Life or Health insurance - are where pre-existing conditions and/orspecified illnesses are not covered when they occur during the waiting period. The waitingperiod usually commences from the date the policy is issued or reinstated. These standardExclusions will be clearly stated in the policy contract.

However, another common Exclusion taken for granted are the ones imposed during theunderwriting process. This is also an Exclusion which is practiced in the insurance industry. Thedifference is that this specific Exclusion is imposed on an individual contract due to theindividual’s health condition, occupation and avocation among others - depending on the degreeof risks involved. For health condition, several factors will be considered before the Exclusion isimposed 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 isthat when a specific Exclusion needs to be imposed, the insurance company will send aConditional Acceptance letter to the customer to inform on the Exclusion. If the customer agreesto the Exclusion, he/she needs to provide consent by signing on the reply slip of the ConditionalAcceptance 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 isthat if the life assured’s health condition has improved for some time, and there will not be anypossible 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 toexplain all the Exclusions to the customers as most customers do not have knowledge of the typeof Exclusion imposed. If customers are still unsure, they must ask questions to their respectiveagent or insurer to avoid any frustrations later,” continued Ho.

If people purchase a policy innocently without realising about an Exclusion, and when a Claimfalls under the particular Exclusion, claims will not be payable according to the terms andconditions 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 thepolicy that is being purchased and that it is suitable for you. As such, always remember to readthe fine print and ask questions to your respective agent or insurer especially on Exclusions ifunsure,” concluded Ho.

http://www.allianz.com.my