Life Insurance

6 Types of Death not Covered in Term Insurance

Some types of life insurance are hugely popular because they offer a high sum assured at a low cost. The most common name on this list is term insurance. A term life insurance plan is the…

Some types of life insurance are hugely popular because they offer a high sum assured at a low cost. The most common name on this list is term insurance. A term life insurance plan is the most affordable form of life insurance. This is primarily the reason why more and more people opt for term insurance. They buy the life cover with a small amount of money, and then if anything happens to them, their family receives a large sum assured. However, like with all other types of life insurance, in term insurance, too, there are specific pre-disclosed exclusions. There are some types of deaths that are not covered under such a policy.

Read on to know what kind of deaths are covered in a Term Insurance plan?

  1. Death by Suicide: Death by suicide is usually not covered under a term life insurance plan. Some insurers return the premium paid for the duration of the policyholder commits suicide within the first year of the plan. If the suicide occurs after that, the nominees usually do not receive anything, and the policy terminates. Some life insurance companies offer compensation for death by suicide if a substantial time has lapsed in the plan. Read the terms and conditions to know the exact coverage available under your term cover.
  2. Death due to Drunk Driving: Accidental deaths are mostly covered under all term insurance plans. However, if the policyholder loses their life due to an accident caused by drunk driving, the nominees cannot file a term insurance claim. Similarly, if the accident takes place due to driving by an unskilled or unlicensed driver or due to any rule violation such as overspeeding or road rage, the term insurance claim won't be honoured.
  3. Death due to Self-harm: People often inflict harm upon themselves by participating in dangerous activities like adventure sports such as bungee jumping. This also happens by undergoing unsafe and banned medical procedures like certain forms of plastic surgeries. If the policyholder's death happens for any reason, the family members cannot claim under the term life insurance policy. Such deaths are not included in a term life insurance plan, and no claim will be paid out.
  4. Death due to Natural Calamity: Natural calamities such as tsunamis or tornadoes often lead to losses of lives. However, if the policyholder of a term life insurance plan dies in such an event, the insurance provider doesn't pay out the death benefit. This is because death due to natural calamities is a common exclusion in most term insurance plans available in India. In some cases, you may get coverage for death due to natural calamities, but you need to check the policy wordings carefully to know the exact scope of the cover.
  5. Death due to Intoxication: If the death happens due to intoxication caused by drug or substance abuse, the life insurance provider will not pay out the claim to the nominees of the policyholder. This is another crucial exclusion that you must be aware of when buying a term life insurance plan. If, however, the specific drug and dosage were prescribed by a doctor and the death happened naturally due to a related illness, a claim may be paid out.
  6. Death due to Pre-existing disorders: At times, deaths happen due to pre-existing disorders such as hypertension or diabetes. The insurance provider may have specific clauses about the pre-existing disorders, including waiting periods. If the policyholder dies shortly after buying the term life insurance plan due to a pre-existing illness, the insurance provider may refuse to pay the life insurance claim.

Read the terms and conditions of the policy very carefully to understand what the exclusions are. This will give you a realistic idea about the available coverage and prevent your nominees from making unsuccessful claims later on.

Must read: How to choose best Term Insurance plan in India?

Importance of Term Insurance:

Even though we get the above exclusions in term insurance, everyone needs to have a term life insurance policy. Here are some reasons why:

  • Affordable Life Cover: The life cover available in a term insurance plan is relatively inexpensive. This is a massive benefit as you get to keep your life protected by paying a small sum of money. Also, the cover available on a term plan is very high, so protecting your family financially becomes easy.
  • Coverage for many years: You can purchase a term insurance plan for an extended period. The term insurance plans are available for periods as long as 20 or 30 years.
  • Flexible: And last but not least, you can add riders to your policy and make the term life insurance cover more flexible. This is another convenient benefit for which you should buy term insurance at the earliest.

Keep these points in mind, and you will know why it is so essential for everyone to get a term insurance plan on a priority basis.

The Bottom Line:

You must invest in a good term insurance plan. This becomes all the more important if you have dependent family members to take care of. Compare term insurance online and find a plan that suits you well. Keep an eye on the clauses and tell your family members about them as well. Try to avoid getting into situations that can leave you in danger and risk the financial well being of your loved ones too. Be cautious, live healthily and enjoy the protection of the term life insurance plan in a wholesome manner. Also, remember to pay the term life insurance premium because the policy needs to be active for your family to make a claim. Since life is unpredictable, you never know when danger may strike; stay protected at all times.

Disclaimer: The information published in this article is for reader′s reference only. The content of this information is to provide an overview of your life insurance needs. It should not be relied upon for personal, medical, legal or financial decisions, and you should consult an appropriate professional for specific advice. The makes no representations about the suitability, reliability, timeliness, and accuracy of the information, services, or any other items mentioned on this subject for any purpose whatsoever.

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