“When does it not pay?” – this question comes up in almost every first conversation, and rightly so: funeral insurance exists precisely so that, in the hardest days, there is no question of how the farewell will be paid for. In insurers' policy conditions, the answer is scattered across several places – the chapters on exemption, exclusions and waiting periods, and the rules on the duty of disclosure. This article gathers them in one place, factually and without scaremongering: the list is short, and most of its items depend on the policyholder's decisions.
- Under Section 6:484 of the Hungarian Civil Code (Ptk.), the insurer is released from paying if the insured person dies as a result of the beneficiary's intentional conduct; the contract terminates without payment of the sum insured in the case of an intentionally committed serious criminal offence or suicide within two years of the conclusion of the contract.
- Exclusion is something else: intoxication or drug use, acts of war and terrorism, racing, ionising radiation – under the policy conditions, cover does not extend to these in the first place, with a list that differs from insurer to insurer.
- The most common real reason is an incomplete health declaration: if the duty of disclosure is breached, the insurer's obligation does not arise – but in life insurance this right lapses once five years have passed (Ptk. Section 6:482).
Exclusion and exemption: not the same thing
The two concepts are worth separating, because their consequences differ. An exclusion means that an event is not an insured event in the first place: the contract does not cover that risk – for example, death caused by acts of war. Exemption is narrower and more personal: the event would in itself be covered, but because of the conduct of the insured person, the policyholder or the beneficiary, the insurer is released from paying – and it is the insurer that has to prove this. The third category, often confused with the other two, is the waiting period and the period of reduced benefits: in these cases death is covered, but in the early phase of the contract the benefit is reduced – this is discussed in the article on the waiting period tiers. The exact list is set by the policy conditions of the specific contract and differs from insurer to insurer; the items below are typical of Hungarian policy conditions.
The statutory grounds for exemption: criminal offence, suicide, the beneficiary's conduct
Legally, funeral insurance is life insurance, so the life insurance rules of the Hungarian Civil Code (Ptk.) apply to it. Under Section 6:484 of the Civil Code, the insurer is released from paying the benefit if the insured person died as a result of the beneficiary's intentional conduct; and the contract terminates without payment of the sum insured if the insured person died as a result of, or in connection with, a serious criminal offence they committed intentionally, or as a result of suicide committed within two years of the conclusion of the contract. Hungarian funeral insurance conditions incorporate this – one Hungarian set of conditions, for example, states that in the case of suicide within two years, the exemption applies regardless of whether the insured person committed it in a state of mental disturbance. Two things are important here. First: once the two years have passed, suicide is no longer a ground for exemption – in the long run, the contract covers this as well. Second: in such cases the law provides for payment of the surrender value, but most funeral insurance products have no surrender value, or have one only in a narrow range of cases – whether anything is due from the premiums paid in such a case is decided by the policy conditions; the article on surrender covers this in detail.
The exclusion list in the policy conditions: intoxication, dangerous activities, war
Exclusions are listed not by law but by the insurer's policy conditions, so this is where the variation is greatest. Hungarian funeral insurance conditions typically include: participation in acts of terrorism or warfare; events causally connected with an intoxicated state or with the consumption of drugs or narcotic substances; driving a vehicle while drunk or under the influence of drugs; the effects of nuclear energy and ionising radiation; events connected with HIV infection; racing and training with motor vehicles; and the use of aircraft, except for events suffered as a civilian passenger. Some conditions also name self-mutilation. Pay attention to the wording: “causally connected” means that what matters is not whether there was alcohol in the blood, but whether it led to the death – and this has to be proven by whoever relies on it, that is, the insurer. The exclusions typically apply to death from illness and death from accident alike, and the accident elements may also have additional rules of their own.
The quiet reason: an incomplete health declaration
As a broker, I see that most disputes arise not from the lists above but from the declaration made when the contract was concluded. Under Section 6:452 of the Civil Code, when the contract is concluded, the policyholder must disclose every circumstance material to the insurer's acceptance of the risk that they knew or should have known about; if the duty of disclosure is breached, the insurer's obligation does not arise – unless it is proven that the insurer knew of the undisclosed circumstance, or that the circumstance did not contribute to the occurrence of the insured event. In life insurance there is an important limit: under Section 6:482 of the Civil Code, the insurer's obligation arises even so if five years have already passed between the conclusion of the contract and the insured event. Hungarian funeral insurance conditions incorporate this: one Hungarian set of conditions also states that the insurer's obligation arises despite the breach of the duty of disclosure if five years have already passed by the time the insured event occurs. This area also covers the fact that with some products, death connected with an illness diagnosed in the years before the contract was concluded is not covered in the first two years, and in the case of death from illness within the waiting period, the insurer refunds the premiums paid – this varies from product to product. The lesson is simple: the short declaration carries great weight; how to complete it properly is shown in the article on the duty of disclosure.
What can the family do if the insurer says no?
First, ask for a written, reasoned decision: it shows whether the insurer is relying on an exclusion, an exemption, a waiting period or a breach of the duty of disclosure – these four cases are different legal situations. With an exemption, the burden of proof lies with the insurer; with the duty of disclosure, you need to check whether the undisclosed circumstance was really connected with the death and whether the five years have passed. If the answer is not convincing, you can lodge a complaint with the insurer, and after that you can turn to the Financial Arbitration Board (PBT) or to a court – the MNB (Hungary's central bank and financial supervisor) does not decide individual claims disputes. The primary route for making a claim is the insurer's claims line; in a stuck or disputed case, I help where I can, acting on your behalf – in interpreting the policy conditions and in formulating your questions; I do not provide legal representation. When and how I get involved is described in the article on a stuck or disputed case.
What should you do now?
If you are taking out a policy now: complete the health declaration honestly and in full, and read the “exemption” and “exclusions” chapters of the policy conditions – they are not long. If you already have a contract: check when you took it out, because the two-year and five-year limits run in your favour. And tell the beneficiary where the policy is and what the contract does not cover – the family can make good decisions if they know what to expect. The insurer pays only for what is an insured event under your contract; this list shows precisely what is not – so that everything else can be one without worry.
Do you have a question about your own family's situation? Let’s talk it through, calmly – 20 minutes, free of charge →
Sources
- Hungarian Civil Code (Ptk.) Section 6:484 – grounds for the insurer's exemption in life insurance (intentional conduct of the beneficiary, serious criminal offence, suicide within two years); Sections 6:452 and 6:482 – duty of disclosure, five-year rule
- MVM Biztosítás – Otthon Alkony funeral insurance FAQ: “What is not covered?”, “What restrictions apply?”
- MVM Biztosítás – funeral insurance general terms and conditions (exemption 18.1, exclusions 19.1, duty of disclosure 3.8–3.9, waiting period 16.3–16.4)
- Alfa Vienna Insurance Group – Alfa Gondoskodás FAQ: exclusions, tiered benefits in the first two years, accident exception
- Judit Barta – Kinga Kántor: Suicide as a circumstance giving rise to the insurer's exemption in life insurance (Miskolci Jogtudó, 2019/1)
- MNB Financial Navigator – Insurance: duty of disclosure, exemption, the role of the Financial Arbitration Board (PBT) and the courts
