Everything You Need To Know About Life Insurance Death Benefits

Here's everything you need to know about life insurance death benefits, and how they work.

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?

It is essential to understand the situations in which the nominee or beneficiary is eligible to receive the sum assured as a death benefit under a life insurance plan. Here are some common cases:

• The death benefit is paid if the policyholder passes away due to health-related issues or natural causes covered under the policy.

• In case of accidental death, the nominee can claim the death benefit, provided the policyholder was not under the influence of drugs or alcohol at the time of the accident.

• If the policyholder dies by suicide, the death benefit is generally payable only if the suicide occurs at least one year after the policy purchase, as per most insurers' rules.

• The death benefit may also be provided in cases where the policyholder passes away due to riots, war-related incidents, or other criminal acts, depending on the policy terms.

**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:

• Death by Suicide:
  If the policyholder dies by suicide within the first year of purchasing the life insurance policy, the death benefit is not payable. Most insurers clearly exclude this under their terms and conditions. However, after the first year, some insurers may refund some of the premiums paid, depending on policy terms.

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 receives 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.

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