What are the Common Exclusions Under Endowment Plans?

Endowment Plans

When you are looking for life insurance, you can choose endowment plans instead of regular plans. With an endowment plan, along with life insurance, you also get to save regularly.

This ensures that you secure the future of your family while saving money at the same time. Read further to understand what an endowment plan is and its common exclusions.

Endowment plan explained

Since an endowment plan provides you with life insurance along with savings opportunities in a single plan, you save regularly along with keeping your life secure.

Unlike typical life insurance, where you receive no benefits on maturity, you receive a lump sum amount when your endowment plan matures. The survival benefits comprise the funds saved along with the interest earned on it.

This helps the policyholder achieve their long-term goals, be it buying a house, funding your child’s education, or simply creating a retirement corpus.

If a policyholder loses their life during the policy, the nominee will receive the sum assured along with the bonus, if applicable. The nominee can then use this amount to fulfil their everyday needs along with paying any debt that the policyholder may have had.

Before buying an endowment plan, it is important to know your savings and insurance needs. You can use a life insurance calculator to ensure that your coverage needs are met.

Common exclusions of endowment plans

When you are buying an endowment plan, it is essential that you are aware of the inclusions and exclusions of your plan to avoid any problems later during maturity or claim.

There are some common exclusions and inclusions that almost all endowment plans have. The insurance company may deny the claim if the demise of the policyholder is caused because of any exclusions that have been mentioned in the policy. Here are the common exclusions of most endowment insurance plans:

Demise caused because of drugs or alcohol consumption

For most endowment plans, the demise of a policyholder under the influence of narcotics or any other substances will not be considered a natural cause.

This is because since the consumption was self-inflicted and pre-determined; it will not be considered an accidental demise either. The exception here is the usage of drugs which are directly instructed by a medical practitioner.


The demise of a policyholder caused because of suicide is usually not covered under most life insurance plans. There are some plans where the nominee or the beneficiary receives at least 80% of the premium that was paid by the policyholder.

However, it is subjected to the terms and conditions of the endowment plan and varies from company to company. It is important to be familiar with the details before you sign up for the policy.

Pre-existing conditions

There are some endowment insuranceplans which clearly do not provide any coverage associated with pre-existing conditions. This means that with the sudden demise of a policyholder because of pre-existing disease, the nominee may not receive any sum assured. It is important to read the fine prints and know beforehand if your plan covers pre-existing conditions or not.

Participation in unlawful activities

The demise of a policyholder because of any unlawful activities like riots or civil commotions is usually not reimbursed by most insurance plans. This is because active participation in such activities is directly associated with hindering peace in society.

Participation in life-threatening activities

Life-threatening activities are those where a policyholder has intentionally taken part in an activity that directly risks their life, like skydiving. In case of an unfortunate demise of the policyholder during such activities, the insurance company may not provide any coverage.

Policyholder’s misinformation

When an individual is buying an endowment plan, it is mandatory for them to provide accurate information. If there are any inconsistencies by the policyholder, the life insurance company may cancel the policy and reject the claim altogether.

It can be tedious to compare several plans, use a life insurance calculator, and read every word of your endowment policy before buying a plan. However, it is important to do so in order to avoid any disappointment later. This is because life insurance is extremely important for the financial security of your loved ones in your absence.


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