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Types of Deaths Covered in Term Insurance Research Team | Posted On Tuesday, July 16,2019, 05:51 PM

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Types of Deaths Covered in Term Insurance



Term Life Insurance is one of the most affordable and secure ways of safeguarding family finances, on an untimely demise. A lump sum benefit is offered as death benefit to the nominee of the policyholder, in case of death within the policy tenure. In this article, we will discuss the types of death covered and the types of deaths excluded under a term insurance policy.

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Types of Deaths Covered in Term Insurance

Natural Death:

The term insurance plan covers natural death or death by disease, within the policy tenure. Some insurers offer insurance cover till the age of 75-80 years. Therefore, if the policyholder dies naturally and is still covered by the policy, then the insurance company is liable to pay the sum assured to the nominee as mentioned in the policy documents.

If a policyholder dies within the policy tenure of a critical ailment or a medical condition, then his dependents will receive the sum assured as a death benefit. Any claims made 20 years or more after availing term policy require lesser verification and the claims are settled easily. But, in case the claims are made within a short duration from availing the policy, the insurer conducts a thorough investigation and scrutinizes policy documents before settling the claims.

See Also: How To Make Death Claims On Term Life Insurance?

Accidental Death:

The term life plan also covers the death of the insured in a road accident. Some plans offer the accidental death benefit as part of build-in features, whereas some term life plans offer this as an additional rider which can be availed by paying an extra amount along with the premium. The rider benefit allows the policyholder to get an extra amount along with the basic sum assured, in case of accidental demise of the insured.

However, there are certain limitations to this rule. If the accidental death is due to driving under the influence of alcohol or intoxication using drugs or involvement in any criminal activity, then the insurance company would reject the claim and cannot be held accountable to pay the sum assured. There are certain other exclusions as well. The life insurer is not liable to pay the sum assured for death in adventure sports like car racing, skydiving, bungee jumping, paragliding and so on.

Death Due to Critical Illness:

Many term life plans include the critical illness cover as an additional rider benefit. The rider benefit can be availed by the insured, to modify the basic term life plan.

This is good for individuals who have family history of critical illnesses or there are chances of developing critical illness due to employment in hazardous areas like working in coal mines or factories. Therefore, if the policyholder dies due to a life-threatening disease and had availed the critical illness rider, then his dependents receive the death benefit.

See Also: Life Insurance Policies

Types of Death Not Covered Under the Term Insurance Plan:

  • Death Due to Lifestyle Habits: The insurance company clearly states that death due to lifestyle habits like heavy drinking or overdose of drugs would not be settled. The insurer would reject such claims if the policyholder is found to have died under drug intoxication of excess alcohol. Death from excessive smoking is excluded under the term insurance plans.
  • Death Due to Self-Inflicted Injuries or Suicide: Insurers cover death by suicide, only after a year. However, some insurance companies pay a part of the premium to the nominee, if the policyholder commits suicide within 12 months from the inception of the policy and it’s in force.
  • Death Due to HIV/AIDS: The insurance company also rejects claims for death caused by sexually transmitted diseases like HIV or AIDS.
  • Death From Man-Made Disasters: Deaths from man-made disasters like war, civil wars or a nuclear explosion are also excluded by the term insurance plans.

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