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Type of Deaths which is Not Covered in a Term Insurance Policy

Term insurance plans are one of the most popular choices of investment for insurance buyers.  It is a preferred insurance product, which knows to provide the only death benefit to the beneficiary of the policy in the event of the uncertain demise of the insured person during the policy tenure.  However, not many people know that there are certain types of death, which is not covered by the term insurance policy.

 Thus, before purchasing a term life insurance plan make sure you know what are the type of deaths that are not covered in a term life insurance plan.

Murder of the Insurance Holder

Case1: If the Beneficiary is a Criminal

The insurance company will not settle the claim if the insured person is murdered and in the investigation, it is revealed that the beneficiary of the policy was involved in the crime. The pay-outs are given only in case the charges are dropped or on release. The insurance company holds back the pay-outs until further notice, till the case is resolved in the favour of the nominee. 

Case2: If the Policyholder Dies Due to Involvement in the Criminal Activity

The insurance company will reject the claim if the insurance holder is murdered due to his/her involvement in criminal activity. No claim will be paid to the beneficiary of the policy if it is found that the insured person was involved in any kind of criminal activity, which resulted in his death.  However, if the policyholder has a criminal background or holds any criminal record but the death of the policyholder is due to any natural uncertainties, for example, if he/she dies due to some illness then the death benefit will be paid to the nominee of the policy.

If the Policyholder Dies Under the Influence of Alcohol

If the death of the policyholder results due to driving under the influence of alcohol or any other type of narcotic substance, then the insurance provider will not entertain the claim. As per the insurance experts, the insurance company rarely issues term life insurance policy to those who are addicted to alcohol or consume any narcotics substance. In case the policyholder has not disclosed these habits to the insurer while purchasing the term insurance policy, then the insurance company will deny the death benefit. Thus, make sure that you mention all the information regarding any such habit correctly while applying for the policy so that you can be sure that in case of any emergency the death benefit will be paid to the nominee of the policy.

Not Disclosing Information About the Smoking Habit

If you are a smoker, then you must disclose to the insurer before purchasing the term life insurance policy.  As smokers possess a higher level of risk for the insurers, the premium amount for the term insurance plans for them is higher as compared to the non-smokers. Thus, it is important to through the policy documents before availing of the term insurance policy. Having a proper understanding of the policy inclusion and exclusion can help you in the process of claim settlement.

Death Due to Pre-Existing Health Conditions

In case of the demise of the insured person due to any health condition that existed while purchasing the term insurance policy will not be settled by the insurance company. Death due to self-inflicted injuries, drug overdose, hazardous activities, STD (sexually transmitted diseases like HIV/ AIDS are not covered by the insurance company unless any of these reasons are covered by the riders.

Death by Participating in Hazardous Activity

The term insurance policy does not provide any coverage for death by participating in a hazardous or adventurous activity like paragliding, skydiving, racing, hiking, etc. These adventure sports poses threat to the life of the insurance holder and can result in deadly accidents.  Thus, if you fail to disclose these details in the application form then the insurance company is not obliged to honor the claim.

Careless Attitude for Term Insurance Plan

It is important to do proper research before purchasing a term insurance plan. Make sure that you compare various plans online and go through the cost and features of different plans. If you buy a term life insurance plan without doing proper research then you might end up purchasing a policy from a non-reputated insurer.

Wrapping it Up!

As we know that it is a must to have a term insurance policy to provide financial security to your loved ones.  However, before making an informed decision make sure that you go through the inclusion and exclusion of the policy and check the CSR of the company so that you can ensure financial security to your loved ones even in your absence.

Written By: PolicyBazaar - Updated: 16 November 2020
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