Everything You Need To Know About Life Insurance Death Benefits

This money can help your family pay off any loans, manage daily expenses, and cover funeral costs, giving them financial security during a tough time.
Let us understand more about death benefits and every detail that one should know about life insurance death benefits.

What are Death Benefits?

Death Benefits are the guaranteed or assured amount provided to the policyholder's nominees/beneficiaries in the event of their untimely demise. If the death claim application form is filled out correctly, the death benefit is paid within a month.
The policyholder has the option of selecting the type of death benefit payout. You can choose to receive a lump sum at one time or a small amount over a long period.

What is Covered Under Life Insurance Death Benefit?

One of the important things to understand is the scenarios in which the nominees/beneficiaries can receive the sum assured (life cover) amount as a death benefit in a life insurance plan. Here is a list of some cases:

• In case death occurs because of health issues or natural causes covered in the life insurance plan.

• In case death occurs because of an accident. However, an individual should not have been abused by drugs/intoxicated at the time of the accident.

• In case the life assured individual commits suicide and the death benefits are only provided if the suicide occurs at least a year after buying the policy.

• In case the life assured passes away due to riots, wars, or other criminal activities.

**Please check your life insurance provider's terms and conditions, as coverage and exclusions may vary by policy.

What is Not Covered Under Life Insurance Death Benefit?

The different types of death not covered by the term plan are as follows:

• If the life assured passes away because of suicide in the 1st year of purchasing the policy

• If the policyholder’s death occurs because of any self-caused injuries or hazardous activities

• If the policyholder passes away due to any STDs i.e., Sexually Transmitted Diseases like AIDS

• If the policyholder passes away because of using alcohol or drug

• If the policyholder dies because of a natural disaster like a tsunami or earthquake

Which Life Insurance Policies Offer Death Benefits?

In India, generally, all life insurance policies offer death benefits if the policyholder passes away during the policy term. These benefits ensure the financial protection of the insured's family and are a key feature of every major life insurance product.

Below are the types of life insurance policies in India that provide death benefits:

• Term Insurance Plans

  Pure protection plans that offer high death coverage at low premiums. No maturity benefit is paid if the insured survives the term.

• ULIPs (Unit Linked Insurance Plans)

  These combine investment with insurance, offering death benefits along with market-linked returns. On death, the nominee receives the higher fund value or sum assured.

• Endowment Plans

  Traditional savings-cum-insurance plans. In case of death during the policy term, the sum assured plus bonuses (if applicable) is paid to the nominee.

• Whole Life Insurance Plans

  Whole Life Insurance offers coverage for up to 99 or 100 years. Death benefits are guaranteed regardless of when the insured passes away, making it ideal for legacy planning.

• Retirement or Pension Plans

  Some annuity or pension plans include life cover during the accumulation phase. The nominee gets a lump sum death benefit if the policyholder dies before vesting.

Tax Savings on Life Insurance Death Benefits

A policyholder can also avail of tax benefits on term insurance premiums. Under Section 80C of the Income Tax Act, 1961, premiums paid are eligible for deductions of up to ₹1,50,000 per year. In case of the policyholder's unfortunate death, the nominee receives tax-free* death benefits under Section 10(10D). This makes term insurance with return of premium a comprehensive solution that safeguards your family from significant financial risks.

How To Claim Life Insurance with Death Benefit?

1. Intimation of Claim

   Upon the policyholder's untimely death, the nominee can intimate the life insurance claim process by submitting the Death Claim Form, attested proof of identification and the nominee's address proof. The form is available online and offline at branch offices on the company's website.

2. Document Submission

   The nominee/claimant must submit necessary documents with the death claim form to verify the information provided to the insurance company about the policyholder's death. Here are the required documents that are required to be submitted within the given time frame:

   Death Types	Documents Required
   Mandatory Documents	Original documents of the policy Canceled Cheque with NEFT details Nominee/Claimant’s ID and Address Proof Death Claim Form
   Additional Documents Required:
   In case of Medical//Natural deaths	Consulted Doctor’s Statement  Certificate of hospital treating the deceased policyholder Employer Certificate or Educational Institute Certificate of policyholder Additional treatment/hospital/ records
   In case of accidental/unnatural deaths	Autopsy/Post Mortem report (PMR) and Viscera Report Police Reports (Panchnama, FIR, Police Investigation Report, Charge sheet)

3. Settlement of Claim

   Upon receiving all necessary documents and forms, the company initiates claim processing. The documents are reviewed, verified, a decision is made (subject to T&C), and communicated to the nominee/claimant.

Wrapping It Up!

Life insurance death benefits are a smart way to ensure the financial protection of your loved ones. After your death, your family will not struggle to meet their daily expenses. They can also use the death policy insurance payout amount to pay off any remaining loans or to take care of significant expenses such as their marriages, children's education, etc.

FAQs