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COVID-19 puts spotlight on life policy exclusion clauses

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The coronavirus outbreak has underscored once again the importance of understanding exclusion clauses in life policies, according to Finlaysons Lawyers.

In recent weeks, many life insurers and super funds have had to clarify whether existing policyholders are covered for COVID-19 after it emerged most covers come with a standard exclusion for pandemic.

Some like AIA and TAL have informed super fund partners that they will not be invoking the pandemic exclusion. At the same time, an exemption clause specifically for COVID-19 may be made for new policyholders or for existing customers who want to raise the scope of cover.

“I think COVID-19 has opened the eyes of a lot of people to what is covered and not covered in a range of policies and particularly what the effects of exclusions in policies are,” Special Counsel Ralph Bonig told

“Everyone looks at what is covered. It’s just as important to also look at what is not covered.”

Mr Bonig says buying a life policy is “not as easy as just ticking a box” because failure to make proper disclosures may end up being costly in the event of a claim.

While life policies are renewable once they have been instated, the onus is on policyholders to provide any relevant disclosures when they want to review their covers.

“COVID-19 is an opportunity for everyone to review their life insurance policies but also to be careful when choosing cover,” Mr Bonig said. “Firstly, make sure that you disclose everything and secondly, that the cover suits your particular needs. And also be warned that if you have a genetic profile, your insurer might ask for that.

“If you don’t disclose something, the insurer has a number of options. One is to void the cover and the other is to reduce the payout, so it doesn’t automatically void the cover but if it has materially affected the risk you certainly run the risk of having your cover voided.”