What Are The Common Exclusions Under Term Insurance Plans?
Updated On Jul 04, 2021
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Uncertainty is a part of life. Your family's financial stability could be jeopardised by a tragic accident or critical illness. However, if you begin investing in life insurance, protecting your family's financial future becomes much easier. A life insurance policy functions as a saviour for your family, protecting them from unforeseen circumstances. The simplest form of life insurance is a term plan. It not only assures your family's financial security, but also provides the option of protecting them from crucial illnesses such as cancer, heart disease, and other ailments. However, like any other contract, term insurance also has a set of exclusions.
What Are The Exclusions Under Term Insurance Plans?
While most insurance companies have different terms and conditions for their term insurance plans, most of them have a few common exclusions. The following are the most common exclusions under term insurance plans-
1. Exclusions For Dangerous or Adventurous Activities
You may have observed that insurance policies have exclusions for dangerous or adventurous activities. This is due to the significant life danger involved with these activities, and as a result, they will not be covered. Skydiving, paragliding, rock climbing, scuba diving, automobile racing, hang gliding, and other adrenaline-pumping adventure activities are typically excluded from this exclusion.
2. Pregnancy-Related Deaths
Typically, term insurance policies do not cover mortality caused by pregnancy or complications connected to pregnancy.
3. Pre-Existing Ailment
Death due to a pre-existing disease is another common exclusion in term insurance policies. Pre-existing diseases are illnesses that the insured had at the time of applying for the insurance or previous to the start of coverage. Term insurance policies normally does not cover these expenses.
4. Aviation-Related Loss
In most cases, death in an aviation crash while travelling on a private jet is not covered under an insurance policy. The insurer may pay out the death benefit if the insured dies while travelling on a commercial aircraft that has a predetermined schedule and routes.
5. Participation In Illegal/Unlawful Actions
No insurance policy sold by any insurer will cover the risk presented by illegal/criminal/unlawful activities. Every life insurance policy has this as a normal exclusion. This can include things like driving while inebriated, consuming intoxicants like drugs or alcohol, being injured or killed in a car accident because the insured was not wearing a seat belt or speeding, participating in illegal protests, and so on. No insurer will pay or consider a claim if the insured died as a result of illegal or unlawful action.
6. In Case of Acts Related To War
This is another common exclusion in a life insurance policy, but it was probably less popular in the past than it is now. The death benefit will not be paid out if the insured dies as a result of a war act or any other war-related action, according to this clause.
7. Suicide
Suicide is an occurrence that most life insurance will not cover, especially if it occurs within two years of the policy's start date. In such instances, the death benefit may not be paid at all, but the nominee may get an amount equal to or greater than 80% of the total premiums paid for the insurance until death, depending on the policy details. This premium refund will be given in accordance with the policy's terms and conditions.
Take Away
We go through several phases in life, each with its own set of objectives and plans. These objectives may include your first job, marriage, child, retirement, and so on. As a result, it is prudent to plan ahead of time for your objectives in order to achieve them. Similarly, a person's financial liabilities are not the same at different phases of life. As a result, you must select your cover carefully.
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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.
