Life insurance plans are purchased to protect the family’s financial security in case of unforeseen death of the life assured. If the policyholder is the sole breadwinner of the family, a life insurance policy is the only option to decrease the financial stress related to death. However, insurance companies offer such plans to cover unfortunate deaths.Read more
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But does life insurance cover suicidal death India? And if they do cover, then what are the different plans that offer this type of benefit? Let’s look into the details of the policy features for a better understanding of the topic:
Yes, life insurance pays the beneficiary/nominee in case of the policyholder’s suicidal death. However, there are some provisions related to payment tenures associated with a suicidal death claim. You must go through the policy documents to avoid confusion during the claims process and ensure that your family is eligible to receive the benefit.
To answer your question, “Does Life Insurance Cover Suicidal Death India,” we have listed the types of plans that do offer death benefits on suicidal death.
The death benefit due to suicide is usually applicable to all types of life insurance plans such as term plans, savings plans, wealth plans, etc. that provide life cover. However, the scope of death benefits offered differs with different plans.
The Indian regulating authority, IRDAI, presented a new change in provisions regarding the death claim related to the suicide of the policyholder in 2014. According to the old provisions, all the life insurance policies purchased before January 2014 will offer no death benefit in case of suicidal death during the first 12 months of the policy issuance/revival. This means that the policy would be invalid and the death claim filed on suicidal death would not be payable. This provision was created to help insurance companies escape insurance fraud. For example, a person might have a few financial liabilities and to escape them, he/she purchased a life insurance plan. After a few months, the policyholder commits suicide to cover the debt amount with the life insurance payout.
According to the new changes, term insurance plans issued after January 2014 will provide at least 80% of the premiums paid on the death of the policyholder during the first 12 months of policy issuance/revival. Therefore, any life insurance plan purchased after the year 2014 pays the death claim in case of the suicidal death of the policyholder.
Rama was an account head at a large MNC in Delhi. Being an accountant, she understands the importance of a life insurance plan. Therefore, she thought of opting for a life insurance plan in her financial planning. A few years later, Rama commits suicide because of depression, and her family members were left without any financial backup. Since Rama had purchased a life insurance plan before committing suicide that will provide Rama’s nominee, with a lump sum amount.
For suicidal death occurring after the completion of the first 12 months of the policy issuance/revival, the death benefit will be paid as usual. That means the entire sum assured on death will be paid to the nominee of the policy in a lump sum amount.
Although suicide is not considered an unforeseen death, the insurance company provides a death claim to help the family suffering from the loss of a loved one. There are a number of reasons why the life assured might have committed suicide. It can be due to debt payment, mental illness, emotional stress, or other such reasons. This payout can help the family members take care of their financial obligations and maintain their current quality of life.
There are some common exclusions in life insurance policies in India. The insurer will reject the death claim to any bonus on maturity during the below cases:
Most life insurance plans have a provision that states that the insurer is not liable to pay if the life assured dies because of suicide within 12 months from the issuing date of the policy. The insurer is not eligible to pay if the death of the life assured occurs before the revival of the life insurance plan.
Life insurance plans generally provide coverage for suicidal death after completing 1 year. This gap of 1 year helps insurers to know that there is no case of fraud in insurance. If the policyholder’s death occurs within 1 year i.e., 12 months of the risk commencement, then the insurer offers 80% of the premium amount paid. For example: if Rama had an eligible beneficiary/nominee, then he/she might get 80 percent of the premium amount paid until that point.
An insurer is not required to pay the claim amount if the policy tenure has lapsed and the paid-up amount remains unpaid.
Also, the insurer is not eligible to pay if any fraud in insurance is committed on the part of the life assured.
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Most of the insurance plans have been updated after 2014 with the suicide provision. This simply means that a policyholder will receive some lump sum amount if he/she has an eligible beneficiary/nominee. If the life-assured has died after the fixed time of 1 year, nominees are liable for the death benefit.
Most insurers have strict guidelines for any kind of misleading detail provided by the life assured. In such scenarios, the beneficiary is not eligible to get any amount from the insurer. The insurer is required to pay only if the life assured has not committed any insurance fraud. In addition to this, if the life assured is insured in any group insurance plan, the nominee is not eligible for any payment.
Suicidal deaths have been rising in India because of several reasons. Emotional instability, dearth of education, debt, etc. are some of the important reasons. The reality is that the family members related to an individual who attempted suicide are going to get affected. So, to answer the most commonly asked question, “Does life insurance cover suicidal death in India?” Yes, a life insurance policy will protect the financial needs of the family in case of suicidal death or death occurring after the completion of 12 months of policy issuance/revival. However, you must compare plans online and go through the T&Cs related to suicidal death before purchasing the most suitable policy.
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