Major Death Cases Which Are Not Covered Under A Term Insurance Policy
Published On Dec 22, 2021
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Term insurance policies have gained immense popularity over the last few years. This is because they are easy to purchase, cost effective, and offer a lump sum amount in case of a death claim. The benefits and riders offered by term plans helps the policyholder and his family to leverage their plans to the fullest. Purchasing a term plan is investing for one's peace of mind as the dependants receive the benefits and the coverage.
Even though term insurance plans are specifically devised to provide insurance coverage to the beneficiary of the insured person, there are certain excluded death events too. Below is a brief discussion on the types of deaths that are covered and not covered by a term insurance plan.
Types of Deaths Covered And Not Covered By Term Insurance Plans
Here's a list of the types of deaths covered and not covered by a term insurance plan:
Natural Deaths Or Deaths Caused By Health-related Issues
The natural deaths or deaths caused by health related issues are covered by a term insurance plan. In case the policyholder dies due to any kind of critical Illness or medical condition, the beneficiary of the policy will get the sum assured as the death benefit.
Term plans also provide coverage in case of the death of the life assured due to an accident. Moreover, many term plans come with an additional accidental death benefit rider under which extra sum assured is paid to be beneficiary of the policy along with the basic sum assured, in case of accidental demise of the policyholder.
Death By Suicide
Incase the insured commits suicide in the initial 12 months from the date of policy commencement, the beneficiary is eligible to receive 80% of the premium paid if the policy is a non-linked one. In case of the linked plans if the policyholder commits suicide during the initial 12 months from the date of policy commencement, the beneficiary of the policy receives 100% of the premium paid. However, if the policy holder commits suicide after the completion of 1 year of the policy the benefits of the policy will be nullified and the policy will be terminated.
In case the death of the insured happens due to Self-inflicted injuries or any hazardous activity, the claim made by the beneficiary will be rejected by the insurance company.
In case the policy holder dies due to overdose of drugs and alcohol, then the insurance company will not provide a death benefit to the beneficiary.
In case the insured gets murdered by the beneficiary and the investigation reveals the involvement of the nominee in the crime, the insurance company will reject the claim. The claim request will be put on hold by the insurance company until the beneficiary gets the clearance.
Generally, the term insurance provides coverage to the family incase of the demise of the life assured due to any natural calamity. Subsequently the nominee receives the sum assured as the death benefit by the insurance company.
Prior to purchasing a term insurance plan it is very important to insurance buyers to go through the policy documentations. Having proper knowledge of both inclusions and exclusions of the policy can help the policy holder avail the coverage and prevent any type of discrepancy during the claim processing.
Disclaimer: This article is issued in the general public interest and meant for general information purposes only. Readers are advised not to rely on the contents of the article as conclusive in nature and should research further or consult an expert in this regard.