A term life insurance plan offers financial safety to the family of the insured. However, most people are unaware of certain types of deaths that are excluded from term life plans. If you have availed a term plan or planning to buy one; then you must understand the types of deaths which are not covered by a term life insurance plan.
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If the policyholder is murdered and the investigation reveals that the nominee was involved in the murder directly or indirectly; then the insurance company will not settle the claim, until the nominee is absolved of all charges. The payment is withheld by the insurance company until the nominee is proven not guilty by the courts.
Insurers rarely issue policies to heavy drinkers and smokers. If the policyholder dies in an accident due to driving under the influence of alcohol or meets with an accident due to heavy drug abuse, insurer will not settle the claim.
See Also: What is a Term Life Insurance Policy?
Smokers must disclose the habit while availing term insurance plans. It is perceived that smokers have higher health risk and may suffer health complications. Insurers load premiums for smokers. If you do not disclose this habit to your insurer; then claims are rejected if death is due to smoking-related complications.
Death resulting from any conditions that existed before the term life policy was availed; is not settled by the insurer. Death due to sexually transmitted diseases, drug overdose, pre-existing critical illnesses are not settled by insurers unless you had availed an add-on rider.
See Also: Life Insurance Policies
Death arising from participation in adventure sports or hazardous activities is not covered by term life insurance plan. These activities may be life-threatening for the policyholders.
If the policyholder dies due to participation in adventure sports like sky diving, racing, paragliding, bungee jumping, hiking, water sports then the insurer will not honour the claims.
Death arising from complicated pregnancies or child birth is not covered under a term plan. The insurer will not settle the claim. These terms and conditions are set during the inception of the policy. The insured must carefully read the policy documents and discuss these terms with the insurer.
See Also: How Much Term Insurance Should I Buy?
Death due to natural disaster is excluded from a term insurance plan. The nominee will not receive the death benefit for deaths resulting from natural disasters. The term insurance plan states that if the insured dies within the policy tenure due to natural disasters like an earthquake or hurricane, then the insurer will not settle the claim.
Suicide is only covered a year after policy inception. If the policyholder commits suicide within the first year of the policy purchase; then the beneficiary would receive 80% of the policy premium, however, the nominee doesn’t get the death benefit.
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