Life insurance's primary purpose is to protect your family in the event of your demise due to an accident or untimely death, allowing you to take care of your loved ones. We refrain from discussing death since it is a depressing topic but inevitable. So, buying a life insurance policy becomes a necessity for us. But, there are certain instances in which life insurance does not offer coverage, like when the policyholder dies in an accident while participating in an adventure sport or while driving under the influence of alcohol. But, what happens if the person takes their own life?
According to WHO, about 7,00,000 people die due to suicide every year, and the statistics clearly show that suicide is a severe problem. Suicide attempters are deemed to be suffering from extreme stress according to Section 115 of the Mental Healthcare Act, which was introduced in the Indian parliament in 2017. In keeping with this, the act decriminalised suicide, requiring the government to provide care, treatment, and rehabilitation to lessen the risk of recurrence. But, the question is whether these life insurance companies cover death by suicide in the insurance policies.
IRDAI Take on Suicidal Deaths
The Insurance Regulatory and Development Authority of India has changed the suicide provisions in term life insurance policies purchased after 2014. Earlier, term insurance plans issued before January 1, 2014, will not provide a death benefit to the nominee if the insured commits suicide. Now, IRDAI has made several changes to the death provisions in life insurance policies. Any life insurance policy purchased after 2014 is payable in the event of the policyholder's suicide.
Does Life Insurance Pay for Suicidal Death in India?
The Insurance Regulatory and Development Authority of India has changed the suicide provisions in term life insurance policies purchased after 2014. In the term insurance policies issued before 2014 January 01, the nominee will not receive any death benefit in case the insured passes away due to suicide.
But since suicide takes a mental toll on the family members, it is liable to pay the compensation to the family members, which was why suicide was decriminalised under Section 115 of the Mental Healthcare Act.
As a result, insurance companies are obligated to compensate family members. A beneficiary might also be many people, so the nominees distribute the payout. The recipient receives a lump sum payment from the insurance provider based on the premiums paid by the policyholder.
What Type of Life Insurance Plans Offer Suicidal Benefit?
The suicidal death benefit typically applies to all life insurance policies that include an element of life cover, such as savings plans, wealth plans, term insurance plans, and so on. However, the amount of the death benefit granted varies with each plan. The insured may have committed suicide due to debt concerns, emotional stress, or severe mental disease. The family is affected in any case, and the main objective of a term plan is to assist such families in recovering from the financial crisis.
Why is Suicide Covered After 1 Year?
Suicide poses a legal risk to the insurance company, and such life insurance plans do not cover them to prevent insurance evasion. There is a chance that the policyholder is deeply in debt and purchases a life insurance policy to pay off the obligation. It is predicted that a person like this will be able to think clearly after 12 months.
However, for one year, suicide compensation is provided to offset the emotional or financial pain that the insured's dependents may feel following the policy holder's death. Because the primary objective of purchasing life insurance is to maintain dependents' lives financially stable when a family member dies, providing them with any aid would be beneficial.
What Happens If a Loan was Taken Against the Policy?
If a mortgage loan is arranged against a life insurance policy, the interest paid to the bank (a third party in this scenario) is protected. The insurance must be valid for at least 12 months, and death must occur within that time.
Exclusions to the Suicide Cover in Life Insurance
The terms of a life insurance policy define the coverage that will be given. There are various exceptions to suicide cover in the life insurance plan in India, as there are other terms in insurance policies.
- Most life insurance contracts state that the company is not obligated to pay if the insured dies by suicide within 12 months of the policy's issuance. If the policyholder dies before the life insurance policy renews, the insurance company is not obligated to pay.
- After one year, most life insurance plans cover suicide death. This one-year interval allows insurance plans to check that there is no evidence of insurance fraud. If the death happens within 12 months of the start of the risk, the insurance company will reimburse a percentage of the premiums paid. For example, if Ranveer is an eligible candidate, he might get 70% of the premiums.
How to Buy Life Insurance Plans in India
Purchasing life insurance has become quite easy and hassle-free, and we, D2C Insurance Broking Private Limited ("RenewBuy"), specialise in it. Here are the steps you should take to get the best life insurance policy.
- Go to Renewbuy.com
- Select the "Life" category.
- Fill all the important details like Gender, Date of Birth, Address etc.
- The following page will showcase the insurers' Life Insurance plans in India.
- Select one of the policies and make the payment.
- Once the payment is made, the policy document will be sent to your registered email address.
Conclusion
Suicide fatalities in India have been on the rise for various reasons. Some of the probable causes include debt, mental instability, a lack of knowledge, and so on. In reality, the family members of the individual who tried suicide are expected to be affected. In such cases, a life insurance plan, such as a term plan, will cover the family's financial necessities. However, the terms and conditions of the plan differ depending on the insurer and the plan.
FAQs
Question: - Is it worth buying life insurance online?
Answer: - Absolutely! When you buy life insurance online, you have the opportunity to compare the best term insurance policies available. You also benefit from lower premium rates as a result of robust competition.
Question: - How to get an estimate of the premium in a term insurance plan?
Answer: - Various websites offer term insurance premium quotes. You must check the website and use the term life insurance premium calculator to get an estimate.
Question: - Before acquiring a life insurance policy, what should I look for in a company?
Answer: - Examining the company's assets under control, claim settlement ratio, brand presence and value, and so on is critical.
Question: - In India, how many insurance companies provide life insurance?
Answer: - There are 24 registered firms approved by IRDAI in India to sell life insurance.
Question: - How to get an estimate of the premium in a term insurance plan?
Answer: - Various websites offer term insurance premium quotes. You must check the website and use the term life insurance premium calculator to get an estimate.