8 Major Death Cases Which Are Not Covered Under Term Insurance Policy

What kind of deaths are not covered in a term insurance plan?

Term life insurance secures the family of the insured financially in case of unfortunate demise of the person within the policy duration. But do you know the death cases which are not covered under term insurance policy? Let’s find out!

We all know that term life insurance allows a lump sum amount as death benefit to the nominee of the insured in the event of the unfortunate demise of the insured during the period of the policy. However, do you also know that your term insurance may not cover death under certain circumstances and the nominee in such cases will not be paid any compensation?

If your answer is NO, you must read on to find out the cases of death that are not covered under term life insurance. This will help in case you have a term insurance plan or if you are planning to buy one soon. This way, you will know what kind of deaths are not covered under term insurance?

8 Major Death Cases that are not Covered in Term Insurance Policy:

1. If the Policyholder Gets Murdered:

Under this case, there are two conditions – one is if the death of the policyholder occurred because of involvement of the person in any criminal activity and the other is if the nominee has a criminal background.

• If policyholder died because of involvement in any criminal activity : The insurance company will not pay any compensation or death benefit if the insured gets murdered because of his/her involvement in any acts of illegal activity. So, if the policyholder who owns the term plan is found to be involved in such criminal activity which caused the person’s death, the insurer will not cover the claim. However, if the person dies due to other causes like illness, natural disaster etc., the nominee will be paid compensation despite their criminal background.
• If nominee is involved in criminal activities :In this situation, the insurance company will not pay the claim amount if it is revealed that the insured gets murdered and the nominee is found to be involved in the crime as reveled by investigations. Here, unless the nominee is freed from  the charges, the insurance company would withhold the payment of the compensation.

2. If the Policyholder Dies under the Influence of Alcohol:

This is another condition under which the insurer might reject the claim. So, if a policyholder dies due to an accident when he/she was driving under the influence of any intoxicant or alcohol etc., the insurer of your term life insurance policy will not pay the compensation. In fact, those who consume alcohol heavily are not even issued term policies by most insurers.

3. If the Policyholder Doesn’t Disclose the Habit of Smoking:

If a person is willing to buy a life insurance term plan and he/she is a chain smoker, the person must disclose the smoking habit to the insurer before availing the policy. Smokers are considered to have high health risks and thus insurers levy additional charges of premium to smokers. However, if the smoker hides his/her smoking addiction while buying the policy and the death of the insured is caused due to complications related to his/her smoking habit, in that case the insurer will not pay any compensation. Thus, it is important not to hide facts and also to have proper knowledge of the things that are included or excluded in term insurance so that you can prevent claim rejections later.

4. If the Policyholder Dies because of Participating in Any Hazardous Sports or Activities:

If the policyholder dies while being a part of an adventure sport or any hazardous activity, the insurance company doesn’t provide compensation in that case. Since adventure sports pose a threat to a person’s life and can lead to fatal accidents, they are not covered by insurance companies. So, if you work in the field of adventure sports, you must disclose it at the time of buying the policy. And if you do not reveal it, the insurer will not approve the claim.

5. If the Policyholder Dies Due to any Pre-existing Health Conditions:

If the policyholder dies due to any health condition or illness that the person was already suffering from at the time of availing the term plan, in that case the insurer will not settle the claim. Here, the policyholder can buy a rider to cover the illness, which will also help in raising the claim and getting the compensation in case of death of the insured.

6. If the Policyholder Dies due to Complications in Childbirth:

This is another condition under which the insurer doesn’t cover the death claim. So, if the insured dies due to complications in her pregnancy or childbirth, the insurer would not pay the sum assured to the nominee.

7. If the Policyholder Commits Suicide during the First Year of the Policy:

Suicidal death is not covered under most term plans in case the insured commits suicide within the first 12 months of buying the policy. In such cases, the nominee is not paid the death benefit by the insurer. But, many insurers may cover suicidal deaths from the second year of the policy depending on their policy terms and conditions.

8. If the Policyholder Dies due to Any Natural Disaster:

If the cause of death of a policyholder is a natural disaster like earthquake, flood, hurricane etc., in that case also the insurer doesn’t pay the nominee any claim amount.

Read More: Does Health Insurance Policy Cover Death?

To Conclude

As you can see from the above details, that there are many conditions under which deaths are not covered by term insurance or not approved by the insurer.  Hence it is important to know all such scenarios so that the insured and the nominee can stay aware of the possible conditions under which the claim might be rejected.

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