Life License Qualification Program (LLQP) Practice Exam

The sections of an insurance contract that limit coverage are called exclusions. These exclusions specify certain conditions, risks, or circumstances under which the insurer will not be liable to pay claims. By clearly defining what is not covered, exclusions help manage the insurer's risk and provide clarity on the scope of coverage for the insured. For instance, a health insurance policy may exclude certain pre-existing conditions or specific types of treatments, ensuring that both the insurer and insured understand the boundaries of the coverage. This transparency is crucial in avoiding disputes at the time of a claim. While waivers relate to the relinquishment of a right, and riders are amendments to provide additional benefits or coverage, they do not serve the primary function of limiting coverage in the same explicit way as exclusions do. Limitations, though similar, typically refer to caps on the amount or the duration of coverage rather than specifying what is not covered altogether. Thus, exclusions are the most accurate term for these sections of an insurance contract.