California Life and Health Insurance Practice Exam

How are acts of war and aviation treated under a group life insurance policy?

1. Fully covered

2. Partially excluded

3. Policy exclusion

4. Special rider required

The correct answer is: Policy exclusion

In a group life insurance policy, acts of war and aviation are typically treated as exclusions. This means that if a member of the insured group suffers a loss or dies as a direct result of these activities, the insurance company will not provide coverage or benefits for that loss. The rationale behind this exclusion is based on the high risk associated with war and certain aviation activities, which can significantly impact the insurer's ability to manage risk and maintain profitability. While some policies might offer certain protections or riders that can address risks associated with aviation (especially for commercial pilots) or may provide additional coverage under specific circumstances, the general standard remains that these areas are excluded from basic group life insurance coverage. This approach helps insurers mitigate the financial risks associated with unpredictable and large-scale events like war, which can lead to numerous claims simultaneously.