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Terms And Conditions In A Term Insurance Plan

Published On Jul 03, 2021 10:45 AM By InsuranceDekho

When it comes to protecting the future of your loved ones, the importance of a term plan cannot be overstated. A term insurance policy is one of the most popular life insurance plans available today due to its low premiums and high returns. In the event of the policyholder's untimely death, the nominees can file an insurance claim to receive the benefits. However, when it comes to meeting an insurance claim, insurers have specific insurance terms and conditions. These conditions are exclusions or scenarios that may result in the claim being rejected. Even though the terms and conditions vary from insurer to insurer, you should be aware of the following common exclusions. 

What Are The Terms And Conditions Listed In A Term Insurance? 

Different insurance companies have different term insurance plans. Likewise, they also have different terms and conditions that are distinctly stated in the term insurance policy papers. The following are the general terms and conditions that are commonly listed in all term insurance policies- 

1. In Case of Accidental Death

Exclusion in the case of accidental death Although an accidental death is covered by a term plan, it does not guarantee that a claim made in such a scenario will be accepted. In the event of an accidental death, insurance companies always conduct an investigation into the circumstances surrounding the incident. The procedure for conducting such an investigation may differ from one insurer to the next, but the findings must be satisfactory for the claim to be accepted.

2. Lifestyle-Related Conditions

The policy may exclude death caused by lifestyle choices. For example, insurance companies always confirm whether or not the insured is a smoker. The habit of smoking is a lifestyle choice that can reduce the insured's life expectancy. As a result, smokers are regarded as high-risk policyholders. As a result, if an insured does not declare his or her smoking habit when purchasing a policy, the insurer may deny the claim in cases where the death is caused by smoking.

3. Suicide And Self-Harm Deaths

The terms and conditions of term insurance always exclude any death caused by self-harm or suicide. However, some insurance companies will refund the premium if the policyholder commits suicide within a year of purchasing the policy. In that case, the insurer deducts certain fees. Furthermore, death as a result of participating in dangerous activities is not covered by the policy.

4. Death As a Result of Criminal Activity

A term insurance policy is intended to provide financial assistance to the policyholder's family in the event of an untimely death. As a result, if an insured engages in any activity that increases the risk of death, insurance companies have the right to deny the insurance claim. Death as a result of participation in riots or other criminal activity meets that condition, and thus they are not covered by the policy.

5. Pre-Existing Medical Conditions

Medical conditions that existed prior to the onset of the onset of the onset of the When it comes to pre-existing medical conditions, insurance companies include a "waiting period" clause in their policies. As a result, if the insurer has a pre-existing illness, he or she must wait for a certain period of time set by the insurer before the health condition can be covered. In the case of life-threatening illnesses, the waiting period can range from a few months to several years.

6. Intoxication-Related Death

Almost every insurance company's term insurance exclusions include any death caused by intoxication. If the policyholder abuses drugs or consumes an excessive amount of alcohol and dies as a result, the insurance company is not obligated to pay the coverage.

Take Away

Being aware of the terms and conditions of your term insurance policy will help you to make better insurance-related decisions at the time of purchase as well as renewal. Knowing your policy’s limitations will help you at the time of filing for a claim settlement too. So make sure to go through your policy papers and be safe. 

Also read - Who Should Be Your Term Insurance Nominee?

6 Reasons Why You should Have Term Insurance Policy

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. 

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