Types Of Deaths Covered And Not Covered In Term Insurance

 

Term life insurance is the ideal financial product when it comes to securing the future of your family. Unlike whole life insurance or even endowment plans, term life insurance has affordable premiums. In case of an unexpected demise, term life insurance plans provide financial protection to the family of the insured. If the insured dies within the policy term, a lump sum amount is paid as a death benefit to the beneficiary.

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Types Of Deaths Covered And Not Covered In Term Insurance

 

Term life insurance plans are specifically designed to cover the death of the insured and to provide monetary benefits to the beneficiaries (read family members of the insured). However, not all deaths are covered by a term life insurance plan. There are certain deaths which are excluded under the term life insurance plan. In this article, let us discuss the various events that are covered and not covered by term life insurance plans.

 

1. Natural death or death caused due to health issues:

 

Term insurance policies cover death due to natural causes or death due to health issues. If the death of an insured is caused by a critical illness or medical condition, the insurer has to settle the claim. The beneficiary of the policy must get the sum assured as the death benefit.

 

2. Accidental demise:

 

Death of an insured in an accident is also covered by term insurance. You can even opt for an additional rider like ‘accidental death benefit’. If you opt for accidental death benefit rider, an extra amount is paid to the beneficiary along with the basic sum assured, if death was due to an accident. To avail this benefit, the insured will be charged an extra premium. However, there are exceptions to the application of this rider:

 

• If death of the insured was caused due to driving under the influence of alcohol/drugs.
• If insured was involved in any type of criminal activities.
• If death was caused due to involvement in adventure sports.

 

3. Death by suicide:

 

Death by suicide is covered subject to certain conditions:

 

• In case of traditional plans, if the insured commits suicide during the initial 12 months from the date of policy commencement, the beneficiary is eligible to receive 80% of the premium paid.
• In case of market linked plans, if the insured commits suicide during the initial 12 months from the date of policy commencement, the beneficiary is eligible to receive 100% of the premium paid.

 

4. Self-inflicted injuries:

 

Term life insurance claims do not cover death caused due to self-inflicted injuries or being involved in a hazardous activity.

 

See  Also: What are the Salient Features of a Term Insurance Policy?

5. HIV/AIDS:

 

Term life insurance policies do not cover the death of the insured, due to sexually transmitted diseases like HIV or AIDS.

 

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6. Intoxication:

 

Death caused due to an overdose of drugs or alcohol is not covered by the term life insurance policy.

 

7. Homicide or murder:

 

If the insured is murdered or killed by the beneficiary and the investigation reveals that the nominee was involved in the crime, the insurer rejects the claim.

 

8. Natural calamity:

 

Death of the insured caused due to a tsunami or any other natural calamity is not covered by a basic term life insurance policy. Such a death is only covered and the claim is settled if the insured opts for a rider benefit for the same.

 

9. Claiming from more than two policies:

 

If a beneficiary makes claims on two or more term life insurance policies, then they are required to follow the guidelines of the Insurance Regulatory and Development Authority of India (IRDAI):

 

• A nominee or beneficiary has to submit the details of an existing term life insurance plan while making a claim.
• The insured’s death certificate has to be presented by the nominee to the insurer.
• The new insurer will verify the information with the existing insurer.
• The beneficiary will receive the claim amount only after the verification is successfully completed.

 

You must go through the policy documents before signing on the dotted line. A term life insurance has various inclusions and exclusions which have a significant impact on claim settlement. To avoid any discrepancy during the claim processing, it is good to read through the fine print and ask for clarifications if needed.

 

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