Term insurance is an excellent way to protect your loved ones’ financial security in case of an unfortunate event. Moreover, the term insurance plan comes with a reasonable premium and provide the nominee with higher death benefits. However, in certain cases, the claim may be rejected because the nominee filed for a claim that isn’t covered by the insurance company. While there are many things that aren’t covered by the life insurance policy but as a policyholder, you should be aware of the types of deaths that are not covered by it. In this article, we will list the scenarios not covered by term insurance coverage.
1. Death from homicide:
Case I: the nominee is accountable: In the event that the nominee murders the policyholder, the insurer will reject the claim. In such circumstances, the payout will be provided only after the murder charges are dismissed or the nominee gets cleared in court.
Case II: The policyholder engaged in a criminal action: If the policyholder’s death was caused by illegal habits, the term insurance plan will not cover it.
Case III: The policyholder is killed in a terrorist attack: The insurance company may deny the claim if the death is caused by a terrorist attack. This is because most insurance companies do not cover such situations.
2. Death due to intoxication:
Suppose the policyholder passes away while driving under the influence of alcohol or as a result of a narcotics overdose. In that instance, the insurer is not liable to pay the death benefit. Most insurers will not give life insurance policies to heavy drinkers or drug users considering the risk associated with this. To avoid claim rejection, you must state any history of alcohol on the proposal form during the underwriting process.
3. Death due to artificial calamities:
Death caused by unnatural calamities will not be covered. Artifical calamities involve invasion, war, foreign hostilities (declared or undeclared), an act of a foreign enemy, truce (armed or unarmed), mutiny, civil war, revolt, insurrection, revolution, civil unrest, rioting, strikes, power usurpation, military usurpation, and so on. If the policyholder dies as a result of these disasters, some insurers will refuse to pay the claim. Thus, it is important to check your policy information to see if death from natural disasters is covered or not.
4. Death from hazardous activity:
Activities such as skydiving and parachuting can result in tragic accidents and endanger the policyholder’s life. As a result, life insurance policy does not cover these types of accidents. As a result, if you engage in these activities, you must disclose this information to the insurer at the time of purchasing the policy to avoid having your claim rejected later.
5. Death by suicide:
If the insured commits suicide within the first 12 months of the beginning of the policy, the term insurance plan will not cover the death. However, most life insurance policy covers suicidal death if it happens in the second year or after.
6. Death from pre-existing medical conditions:
Suppose the policyholder dies as a result of a pre-existing medical condition that they did not mention when acquiring the life insurance policy. In that instance, the insurer has the option not to accept the claim. Similarly, death caused by self-inflicted injuries or sexually transmitted diseases such as HIV are not covered.
For example, a sudden death while the policyholder is sleeping is considered natural. Furthermore, if the policyholder is infected with an illness and dies as a result, the death will be classified as a health-related death and a insurance policy will cover these types of fatalities.
7. Death from childbirth:
If the policyholder dies as a result of pregnancy or childbirth complications, the insurer will not pay the sum assured to the nominee.
8. Death from an accident:
A term insurance plan also provides coverage for accidental deaths. An accidental death is a sudden, unexpected, and unintentional event caused by an external, violent, and evident force. The death will be categorized as accidental if it is caused by this accident and happens within a specific time frame, often (90 to 180 days) after such an event or trauma.
9. Death from Terrorist Attacks:
If an insured individual is killed in a terrorist attack, the beneficiary cannot make a claim for that death.
Types of Deaths will be covered by a term insurance plan!
Term insurance plans will cover deaths in the following scenarios:
- Term insurance plans cover any natural death or health-related difficulties. If the policyholder dies as a result of a serious illness or medical condition, the death benefit will be paid to the policy’s beneficiary.
- Term plans also cover the insured’s death due to an accident.
- Furthermore, many term life insurance policies include an accidental death benefit rider, which pays an additional sum assured to the policy’s beneficiary in addition to the base sum assured in the event of the policyholder’s accidental death.
So we are saying,
With that being said, having a term insurance policy is indeed a very useful tool to protect your loved ones. One can get the maximum coverage at an affordable premium, which gives you multiple options to pay annual, semi-annual, quarterly, or monthly premiums. Moreover, the death benefit given to the nominee is exempted from taxation under Section 10 (10D) of the Indian Income Tax Act.
