Understanding life insurance exclusions
Last updated on March 20th, 2025
When you take out a safety net, you want to ensure there are no gaps, so it’s important to understand any life insurance exclusions that might apply to your policy.
Life insurance is a contract between you and your insurer, whether it’s through your superannuation fund or a standalone policy. Both parties have obligations. You need to be open and honest when providing information that can affect the level of cover or your premiums, or you risk having a claim denied.
In return, the insurer should clearly outline all life insurance exclusions at the outset. You need to know the circumstances under which a claim might not be paid out to decide if life insurance is worth the money.
Exclusions fall into two categories, general exclusions and specific exclusions.
General life insurance exclusions
These exclusions are across the board, regardless of your age, medical history or other personal circumstances, and include:
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- Suicide or self-harm - Most insurers have a suicide or self-harm clause that prevents anyone from making a claim for suicide or attempted suicide for between one and two years of taking out the policy. This clause is designed to prevent people from taking out policies before harming themselves to ensure they or their families will receive financial benefits.
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- Criminal behaviour – Insurers will not pay out on claims where the death or injury is either the direct result of criminal activity or involvement thereof.
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- Negligence – This exclusion can vary depending on the insurer, but it generally refers to the death or injury from reckless behaviour that any reasonable person would not undertake.
Specific life insurance exclusions
These exclusions are tailored specifically to the applicant. Insurers ask for information such as your medical history and lifestyle because they want to assess your level of risk. These can include:
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- Your job – If you work in a high-risk occupation, such as underground mining or construction, this can affect your ability to take out life insurance. Or it may just make the premiums a lot more expensive. In addition, if your job involves inherent risks, such as car accidents for Uber or taxi drivers, these occupational hazards may be excluded.
- Your hobbies – If you spend your spare time skydiving, bungee jumping or undertaking other high-risk activities, this could be noted as an exclusion in your policy.
- Your underlying health – Pre-existing medical conditions, such as diabetes or ongoing health issues, may lead to exclusions or increased premiums. Policies vary between insurers, so it’s important to ask questions and understand how your health history impacts your coverage.
What about mental health exclusions?
People who have suffered from depression or anxiety can feel particularly vulnerable answering questions about their health and wellbeing, as mental health exclusions an area of contention among advocates.
The Public Interest Advocacy Centre (PIAC) called on the Australian Securities and Investments Commission (ASIC) to investigate the life insurance industry for unfair bias against clients with mild mental health problems.
According to PIAC, many insurers were refusing to pay out claims on the grounds that policyholders did not disclose mild mental health issues, such as visits to a GP for depression or anxiety years earlier.
In addition, some insurers have been accused of denying coverage altogether on mental health grounds or applying overly “broad, unreasonable exclusions in the absence of clear evidence”.
What if my claim is denied
If you think an exclusion has been unfairly applied, or if you're having trouble getting your insurer to pay out, regulations are in place to protect you.
Contact the insurer directly asking them to explain their decision first. If you're not satisfied with their response, take the matter to the Australian Financial Complaints Authority. And if you feel like you are going around in circles, lodge a complaint with us and we’ll help you handle it.
