Term insurance policies provide the family of the life insured with excellent financial protection and other term insurance benefits at a very cost-saving rate in the terrible event of the life insured’s passing.
In the event that the insured passes away while the policy is in effect, the beneficiary will get a death benefit. Even if they are among the greatest options for life insurance, it is essential to be aware of the types of deaths that term plans in India cover or do not cover. You can use a term insurance calculator to calculate the average cost of premiums for your term plan.
Let’s look at the types of fatalities that term insurance does not cover.
- Passing away due to driving under the influence of alcohol – The insurance company will reject the claim if the life insured passed away as a result of driving while intoxicated or under the influence of drugs.
- Accidental passing away as a result of drug use while driving: If the life insured passed away as a result of driving under the influence of drugs, the life insurer would reject the claim.
- Passing away caused by engaging in hazardous activities – Term insurance does not cover passing away caused by taking part in risky activities. These behaviours endanger the life of the person whose life is insured and may result in terrible accidents. If you, the life insured, participate in adventurous activities like skydiving, paragliding, parachuting, and trekking, you must disclose this information when acquiring the policy.
- Passing away resulting from pregnancy and childbirth – If the life insured passed away as a result of pregnancy-related complications or childbirth, the insurer would not pay the nominee the sum assured. A term insurance policy won’t cover a pregnancy-related demise that occurs during childbirth.
- Passing away resulting from a pre-existing medical condition – In the case of a passing brought on by a condition that existed at the time the term insurance policy was bought, the insurer will not make a payout. The insurance does not provide compensation for passing away brought on by self-inflicted harm or risky behaviours, sexually transmitted illnesses like HIV or AIDS, or drug overdoses.
- Passing away caused due to participation in illegal activities –
There are two scenarios when demise brought on by involvement in an unlawful activity is feasible. These are what they are:
- Case 1: If the nominee is a criminal – The insurer will not pay the claim if the life insured is slain, and it is later determined that the nominee was also involved in the crime.
- Case 2: If the policyholder passed away as a result of engaging in criminal conduct: If the life insured dies as a result of engaging in criminal activity, the term insurance company will not pay the claim.
- Suicide – If the policy is a non-linked one and the insured passes away by suicide within the first 12 months of the policy’s start date, the beneficiary is eligible to receive 80% of the premiums paid. In the case of linked plans, the beneficiary will receive 100% of the total premiums paid if the policyholder dies by suicide within the first 12 months of the policy’s start date. However, the benefits of the policy would be void, and the policy would be cancelled if the policyholder passes away by suicide after the policy’s first year has expired.
Under the lifestyle category, there are some exclusions. The policy must take notice of your smoking habits. The insurance provider will then calculate the risk of smoking-related demise and add to the premium. Use a term insurance calculator to find out which term plan works that suits your needs. Chain smokers provide a significant danger to insurance providers. The firm may deny your insurance claim and term insurance benefits if you make any attempt to hide your smoking history.
In addition to the advice given above, let’s look at the types of deaths that term insurance does not cover.
- Self-inflicted harm: The insurance company will deny the claim if the cause of demise was a self-inflicted injury or any risky, adventurous activity.
- HIV/AIDS: If the passing away results from a sexually transmitted disease like HIV or AIDS, the insurance company will not accept the claim.
- Intoxication: The insurance company has the right to deny a claim if the demise was brought on by the use of alcohol or any other type of drug.
- Homicide: The insurance provider will deny the claim if the policyholder passes away as a result of the nominee’s murder. If an investigation is opened, the insurance provider will postpone payment of the claim until the nominee has been found not guilty.
- Natural disasters: Unless the policyholder purchases an additional rider, the life insurance company will not pay for passing away caused by any natural disaster.
Insurance is the subject matter of solicitation. For more details on benefits, exclusions, limitations, terms, and conditions, please read the sales brochure/policy wording carefully before concluding a sale.