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.
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.
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:
Death by suicide is covered subject to certain conditions:
Term life insurance claims do not cover death caused due to self-inflicted injuries or being involved in a hazardous activity.
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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Death caused due to an overdose of drugs or alcohol is not covered by the term life insurance policy.
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.
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.
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):
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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