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Types of Death Covered in a Term Insurance Plan

Published On Sep 12, 2021 5:00 PM By InsuranceDekho

In times of need, a term insurance plan can be a lifesaver. It protects the deceased's dependents, allowing them to face any challenges that may arise. In term insurance, the benefit is paid to the nominee in the event of the policyholder's death, who is usually the family's breadwinner. The payout might be made in monthly instalments, a lump-sum payment, or both, depending on the term insurance policy purchased. Even though term insurance protects against early death, some types of deaths aren't covered by term insurance.

Types of Death Covered in a Term Insurance Plan

An insurance policy may cover the following types of deaths.

  • Natural Death

    Term insurance plans cover health-related or natural death. If the policyholder dies due to a medical condition or an illness that leads to death, the insurance payout is distributed to the nominee. In addition, if the policyholder has chosen a critical illness rider, the insured receives a lump-sum payment upon the diagnosis of a critical illness rider.
  • Accidental Death

    An accident-related death is covered by a term insurance policy. Suppose the policyholder is involved in a car accident that results in sudden death or death in hospital due to an accident. In that case, the insurer will pay the term insurance payout to the nominee. However, if the policyholder was intoxicated or under the influence of any substance while driving, involved in a crime, or fled after breaking any law, and the policyholder died in an accident, the claim will be denied.
  • Homicide

    If the policyholder is murdered and the insurer discovers that the beneficiary or nominee was engaged in the crime, the death benefit is rejected or withheld until the charges against the nominee are dismissed.
  • Suicide

    If the insured person commits suicide within the first 12 months of the policy, the named beneficiary is eligible to receive 80% of the premium amount paid if the policy is non-linked. If the term plan is linked and the policyholder commits suicide during the first 12 months, the beneficiary is entitled to receive 100% of the premium paid. The nominee will not be awarded a death benefit if the policyholder commits suicide before the policy's 12-month period has expired. The 12-month period is designed to deter people from committing suicide because they are in debt. It is crucial to note, however, that not all term plans in India cover suicide. Therefore it is critical to understand the policy's terms and conditions, as well as the types of deaths that are and are not covered, as well as the provisions that follow.  

Take Away

When purchasing a term plan, you must familiarise yourself with the advantages and the policy's exclusions. You can make it a point to read the life insurance policy document thoroughly. Having sufficient knowledge can assist you in selecting the most appropriate term insurance for your needs and avoid any discrepancies during claim processing.

Also read: Type of Term Insurance Claim You Need to Know About

All You Need to Know About Term Life Insurance

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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