Before buying insurance, read the exclusions list against your actual plans and answer every application question truthfully. IFEC's guidance on applying for insurance says to compare coverage, exclusions, excess and deductibles as well as premiums, because the lowest premium is not necessarily the most suitable coverage. The same guidance notes that missing or incorrect material information can affect coverage or claims. Both rules work together: exclusions describe what the wording does not cover, while disclosure determines whether the insurer receives the information needed to assess the risk.

Define the terms in decision order

A premium is the price. Coverage is the event or loss the wording promises to assess. An exclusion is a listed event, condition or use the policy does not cover. An excess or deductible is the amount you bear under the policy's deduction rules; check whether it applies per claim, per year or on another basis. Disclosure means answering the insurer's application questions truthfully, including material information the insurer would reasonably consider when deciding whether and how to cover you. A waiting period, definition, notification deadline or territorial limit can be just as important as the headline benefit.

Worked example with disclosure and an exclusion

All figures are illustrative and not any real product's terms. A traveller plans a five-day ski trip. The illustrative policy has a HK$300 premium, a HK$500 excess per medical claim, and excludes winter sports unless declared with an HK$80 add-on. One application question asks whether the applicant has an existing medical condition.

The traveller declares mild asthma and buys the winter-sports add-on, paying 300 + 80 = HK$380 on 1 December. Cover runs from 2 to 6 December. On 4 December, a ski injury produces an HK$3,000 medical bill, paid from retained cash. Assume the claim is approved, the full bill is within limits and no other deduction applies: 3,000 - 500 = HK$2,500 is reimbursed on 20 December. The traveller needed HK$3,000 available before reimbursement and bears HK$500.

This example shows two separate controls. Declaring skiing and paying the add-on addresses the winter-sports exclusion. Declaring asthma addresses the application question. Neither action turns the policy into a guarantee. Suppose the policy contains a stated exclusion for claims arising from asthma during a 12-month waiting period. The traveller disclosed asthma truthfully, but an asthma-related claim could still be excluded while that waiting period applies. Disclosure removes the risk of having failed to disclose; it does not rewrite a coverage exclusion. Conversely, if a knee injury on the ski slope is not connected to asthma and all add-on conditions are met, the asthma exclusion need not block that claim. The distinction is always between the activity or condition excluded and the event actually claimed.

Practical reading method

List your planned activities, destinations, possessions, pets, pre-existing conditions and recent treatment. For each item, search the policy for a matching exclusion, waiting period or definition. If a question is unclear, ask the insurer in writing what to include, save the reply and answer accordingly. Do not guess “probably not important”; also do not volunteer information outside the question in a way that obscures what was asked. Save the completed application, declarations, premium receipt and policy schedule together.

Common mistakes

  • Buying on premium alone. Coverage, exclusions and excess decide what a policy can do.
  • Reading only a summary. The policy wording and questions govern.
  • Treating disclosure as a universal guarantee. It is truthful completion, not automatic coverage.
  • Confusing an excess with an exclusion. An excess reduces a payable claim; an exclusion can prevent cover.
  • Ignoring changes after purchase. Renewal or trip changes may require fresh disclosure.

Checklist before you pay

  1. Read exclusions and note every one that touches your plans, health, home or pet.
  2. Record each excess, its basis and the currency.
  3. Answer every application question truthfully and save your answers.
  4. Ask unclear points in writing and keep the reply with the policy.
  5. Reserve enough cash for the premium and a potential bill before reimbursement.

AI-generated article; general education only, not insurance, investment or lending advice. Source: IFEC, Applying for insurance.