Types Of Death Covered And Not Covered by Term Insurance Policy

4 min read

Everyone wants a secure future for their family, where they don’t have to worry about any financial insecurity. When a person is the sole bread winner in a family with many dependents, the concern about securing the future of the dependents becomes all the more important.

If you analyze about the best possible ways to secure the future of your family through financial planning, the first thing that comes to mind is term insurance. The fact that term insurances are available with affordable premium, they serve as most viable options in terms of offering financial protection to your family.

With term insurance, there is no worry about the monetary needs of the family members of the insured in the event of his/her unfortunate death as the nominees can get a lump sum amount as death benefit.

Thus, term insurance removes the financial distress of a family in the event of the demise of the bread winner. However, it is important to know the various conditions or various deaths that are covered or the ones that are not covered by term insurance.

Does term insurance cover accidental death or does term insurance cover natural death only. These are the question that you might have. In this blog, we are offering you a guide about the types of death covered in term insurance.  So read on to know more.

Deaths Covered by Term Insurance Plan

Natural Death due to health issues

If the death is natural where the policy holder dies because of any health issue or any critical illness, the nominee of the insured gets death benefit in the form of sum assured. Thus, natural death is covered by term insurance plans.

Accidental death

Term plans also offer cover against deaths due to accidents. Some such plans provide an extra rider of accidental benefits on death. In such policies, the beneficiary gets bonus sum assured together with the standard sum assured if the insured person dies due to accident.

However, this policy comes with certain exceptions, such as;

  • If the insured dies under alcohol influence while driving.
  • If the insured dies under the influence of any drug while driving.
  • If the insured dies due to involvement in any criminal activity.
  • If the insured person dies while engaging in any adventure sports.

In all the above cases, the claim gets rejected and the nominee doesn’t get any compensation.

Also Read: Learn About Term Insurance Riders

Deaths Not Covered* by Term Insurance Plan

Death caused by suicide

There are some regulations in case the insured person dies by committing suicide. Here, if the insured dies within the first 1 year of the start of the policy, the nominee can get 80% premium paid. However, the condition is that the policy should be non-linked. For linked policies, the nominee in the same situation can get 100% of the total paid premium.

On the other hand, if the policy holder dies due to suicide after 12 months of the term plan or after its renewal, the beneficiary can get complete sum assured or death benefit as per the terms of the policy.

However, there are many insurance companies that doesn’t allow term insurance coverage for suicides, and so it is important that consumers should go through the policy documents well before purchasing the plan.

Death caused by self caused injuries

If a policy owner dies due to self-inflicted harm or for participating in hazardous action, the claim of the nominee might be refused by the insurance provider.

Death caused by HIV/AIDS

Death caused by sexually transmitted diseases are also not covered by insurance providers. So death due to HIV/AIDS will not be covered.

Death caused by intoxication

Another death coverage not included in term plans is the death caused due to drug overdose or due to consumption of heavy alcohol dosage. Here, the beneficiary will not get death benefit.

Death because of Homicide

Homicide is another condition where the beneficiary doesn’t get death benefit. So, if the insured person is murdered and the involvement of the beneficiary is revealed in the case, the claim gets rejected. Thus, unless the nominee is proved not guilty, the claim will stay on hold.

Death caused by Natural Calamity

Most term plans offer coverage for families against death caused by natural calamities such as tsunami, lightning, earthquake and so on. In this case, the policy provider offers the amount of sum assured to the nominee as death benefit.

*Not covered or claim may be refused

Also Read: How To Compare The Best Online Term Insurance Plan?

Making claims for two or more policies

There are certain guidelines of the Insurance Regulatory and Development Authority of India (IRDAI) pertaining to two or more term plan claims made by beneficiaries as death benefit insurance, which everyone has to follow:

  • Beneficiary has to submit details of the already existing term plan if they buy any new plan.
  • The proposal form of the new policy should have the information of the existing policies
  • The death certificate of the insured should be submitted to the insurance company by the nominee
  • The information of the existing policy provider will be verified by the new policy provider
  • After verifying everything, the policy provider presents the claim to the nominee.

Conclusion

Now you know that plans of insurance that provide only death cover are called term plans. Term Plans are beneficial for securing the future of a family in the event of a sudden misfortune. However, before purchasing a term plan, it is important to go through the policy documents properly. Also, knowing about the inclusions and exclusions is also important if you want to avail the best benefits. This also helps the policy owner in case of any disagreement during the time of claim processing.

So, just make sure to go through the policy document well before purchasing a term plan so that you can get total benefits from the plan.

Also Read: Term Insurance Premium – A Key Factor To Finding The Best Coverage

SHARE THIS ON
Author Bio
Author Image

Gayatri Prabhu, Head-Digital Business at Mahindra Insurance Brokers Limited (MIBL) is one those few digital leaders who has the width and depth that is required to execute an ROI driven holistic digital strategy. She cuts through the noise, identifies the critical levers and leads her team to successful execution of the defined strategy. Her core mantra to win new and retain existing customers is: understand the consumer behavior and craft experiences around it.

Related Blogs

Would love to hear from you

Share your candid feedback. Your email address won’t be published, we promise!

All fields are required

Corporate Office : Mahindra Insurance Brokers Ltd ( A Mahindra Group Company ) Sadhana House, Ground Floor, 570 P. B. Marg, Behind Mahindra Towers, Worli, Mumbai 400018.

Licenced by IRDAI License No. 261; License Validity : 17-05-2022; Category : Composite Broker; CIN : U65990MH1987PLCO42609 Member of Insurance Brokers Association of India (IBAI).

Insurance is the subject matter of solicitation.

For a seamless experience, use the latest version of Chrome/Firefox/Internet Explorer.

Copyright © 2022 Mahindra Insurance Brokers. All Right Reserved.

SPEAK TO AN EXPERT