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Types of Deaths Not Covered by Term Insurance

A term insurance plan is the best way to ensure the financial well-being of your family members in case of the unfortunate event of your death. These plans come with affordable premium rates and offer the nominee/beneficiary a death benefit in the form of a lump sum amount so that they can lead a life without hassle. However, there are some cases that can lead to claim rejection. Therefore, if you have a term insurance plan or are planning to buy one, it is important to know the types of deaths covered and not covered in term insurance. In this article, we will discuss all the types of death that are not covered by term insurance in detail.

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What Are The Types Of Deaths Not Covered By Term Insurance?

Let’s discuss what types of deaths are not covered under term insurance:

  1. Death due to Suicide

    Most life insurance companies in India do not cover death by suicide in the first year of term insurance policy. It is important to check the exclusions and inclusions of the plan through the plan’s brochure before purchasing a plan.

    In case of death because of suicide within 12 months from the date of commencement of risk under the plan or the policy’s revival date, the beneficiary/nominee of the policyholder shall be eligible for at least 80% of the total basic premium paid by the policyholder till the death date or the surrender value available as on the date of death provided the policy is in force.

    *The T&Cs of exclusion might vary from insurer to insurer. Refer company’s brochure. 

  2. Death due to Self-Inflicted Injuries

    In case the life assured's death happens due to self-inflicted injuries or hazardous activity, the claim made by the beneficiary will be rejected by the insurance company.

  3. Death while Driving under Drugs/Alcohol Influence

    The insurer rejects the claim if the policyholder's death is because of driving when drunk or under the influence of a substance. Term plans are commonly not offered by insurers to drug users or heavy drinkers. The company would not give any death benefit if the policyholder failed to disclose all these habits while buying the term plan.

  4. Death due to Undeclared Pre-existing Diseases

    If the life assured dies because of a pre-existing health condition they may have had before buying the term plan and did not disclose. In such cases, the insurance company has the right to reject the claim. 

  5. Death due to Participation in Illegal Activities

    There are two possible scenarios in this case which are:

    • If the beneficiary/nominee is criminal: If the policyholder is murdered and later it is discovered that the nominee was also involved in the crime, the insurance company will not pay the claim amount. Until the nominee is proven guilty, the insurer will always reject giving the payment.

    • If the policyholder dies due to involvement in criminal activity: If the policyholder is killed because of his/her engagement in any illegal activity, the term insurer will not pay the claim amount. However, the nominee will receive the claim amount if the life assured has a criminal track record but dies because of a natural calamity like lightning, flu, or dengue.

  6. Death due to Participation in Adventure Sports/Activities

    Participation in adventure sports or activities is often excluded from coverage under standard Term Insurance policies. In the event of death resulting from engaging in such activities, the policy may not provide a death benefit to the nominees. 

  7. Death due to Natural Calamity

    Death resulting from natural disasters or acts of God, such as Tsunamis, Earthquakes, and floods, is generally not covered by standard Term Insurance policies. However, certain plans and riders include coverage for such events. Therefore, it is essential for policyholders to carefully review and understand the policy terms, conditions, and available riders to ensure comprehensive coverage that aligns with their needs and potential risks.

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What Are The Reasons For Term Insurance Claim Rejection?

Here are some reasons for term insurance claim rejection:

  1. Non-Disclosure or False Information:

    Providing inaccurate personal details, such as age, profession, and health history, can lead to claim rejection. Verify policy documents for any discrepancies and inform the insurer promptly.

  2. Lapse in Policy: 

    Failure to pay premiums results in policy lapses. If the policyholder dies during this period, no death benefit is paid out. Timely premium payments are crucial to ensure policy coverage.

  3. Nominee Details:

    Failing to appoint or update a nominee may complicate the claim process, requiring legal documentation. Keeping beneficiary details current ensures a smooth and swift claim settlement.

  4. Undisclosed Medical Tests:

    Insurance providers conduct medical tests, especially for higher age or risk coverage. Failure to submit these tests may lead to claim rejection, as the insurer may attribute the death to a pre-existing condition.

  5. Policy Exclusions:

    Insurance policies list specific exclusions, such as suicide or death under intoxication. Claims for deaths falling under these exclusions are not valid.

  6. Hiding Other Insurance Policies: 

    Disclose existing life insurance plans, as they impact the sum assured eligibility. Failure to do so may limit the coverage amount and affect claim settlements.

  7. Delay in Filing for Claim: 

    Promptly informing the insurer of the policyholder's death is crucial to avoid claim rejection. Delay in filing can lead to investigations into the cause of death, potentially complicating the process.

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What Are The Types Of Death Covered In Term Insurance?

To answer a common question, “Does term life insurance cover all types of death?” Let us discuss the types of death covered in term insurance:

  1. Death because of natural causes or health-related problems

    Term insurance plans cover natural death or death caused by health-related issues. If the policyholder dies due to any critical illness or medical condition, the policy's beneficiary will get the Sum Assured as the death benefit.

  2. Deaths arising from medical illness 

    If a policyholder dies because of a disease or medical illness such as kidney failure, such deaths are also generally covered by a term insurance plan.

  3. Accidental Demise

    Term plans also provide coverage in case the insured dies due to an accident such as a motor vehicle accident, fire injury, electric shock, drowning in a river, etc. Moreover, many term life insurance plans come with an additional accidental death benefit rider under which an extra sum assured is paid to the beneficiary of the policy along with the Basic Sum Assured in case of accidental demise of the insured person.

    However, there are certain exceptions to this. The death of the insurance holder under the influence of alcohol or any type of drug while driving or due to involvement in any type of criminal activity leads to claim rejection. Moreover, life insurance plans also exclude the death of an individual due to involvement in adventure sports like skydiving, parachuting, rafting, bungee jumping, etc.

  4. Deaths due to COVID-19

    With the increasing pandemics worldwide, various term insurance seekers wonder whether a term insurance plan would involve coverage for the disease. Term plans offer coverage for death occurring because of COVID, provided an individual contracts the disease after buying the policy and not before.

  5. Tsunami or Natural Calamity

    Generally, the term insurance plan provides coverage to the insured's family in case of the insured person's demise due to a tsunami or any other natural calamity like lightning, weather conditions, earthquake, etc. Subsequently, the policy's beneficiary receives the Sum Assured amount as a death benefit from the insurance company.

    *The T&Cs of exclusion might vary from insurer to insurer. 

Wrapping It Up!

Before purchasing a term life plan, insurance buyers need to review the policy documentation. Having proper knowledge of both inclusions and exclusions of the policy can help the policyholder avail the coverage and prevent any type of discrepancy during the claim processing.

FAQs

  • Q: What type of death is not covered in term insurance?

    Ans: Term insurance plans do not provide coverage for deaths due to:
    • Death due to suicide in 1st year of policy purchase
    • Self-inflicted injuries
    • Death because of driving under the influence of drugs/alcohol
    • An undisclosed habit/disease
    • Involvement of life assured in criminal activity
    *The T&Cs of exclusion might vary from insurer to insurer. Refer company’s brochure.
  • Q: Which types of death are covered in term insurance?

    Ans: Here is a list of the types of death covered in term insurance:
    • Health-related or natural death
    • Death because of medical disease
    • Death because of COVID-19
    • Natural Calamity
    • Accidental death (for example, motor vehicle accidents, fire injuries, electric shock, drowning in a river, etc.)
  • Q: What is an accidental death in term insurance?

    Ans: Accidental death is a sudden, unforeseen, and uncontrolled event caused by a violent, external and visible force, such as death from a car crash, choking, drowning, slips, or any other situation. These deaths are covered in a term insurance plan. Some term plans have attached riders, providing an additional sum assured on death due to an accident.
  • Q: Does Term Insurance cover suicide?

    Ans: No, term insurance does not cover suicide in the 1st year. If the life assured, availing a term plan, commits suicide within the 1st year, i.e., 12 months of the policy tenure, then the nominee/beneficiary will not be paid the death payout. Exclusions are subject to changes in the insurer’s T&Cs. Refer to the policy documents of an insurer.
  • Q: What is a Death insurance policy?

    Ans: Term insurance is commonly referred to as the death insurance policy as it has most types of deaths covered. You can check out the inclusions and exclusions of each plan to get a better understanding of this type of death cover insurance.
  • Q: Does Term life insurance cover all types of death?

    Ans: Yes, term insurance covers all types of death, but there are some limitations. For example, term insurance covers death due to medical illnesses, but the insurer will not offer the death benefit in case of death due to any pre-existing illnesses.
  • Q: Is natural death covered in term insurance?

    Ans: Yes, natural death is covered in term insurance. However, you should always check the term insurance cover which type of death in each plan for your better understanding.
  • Q: Is accidental death covered in term insurance?

    Ans: Yes, term insurance covers accidental death, like death due to a motor or car accident, due to fire injury, or drowning in the river. However, the types of death covered in term insurance differ from plan to plan. Therefore, always check your term insurance cover which type of death.
  • Q: Which type of death cover insurance is term insurance?

    Ans: In term insurance, all kinds of deaths are covered apart from death due to undisclosed medical conditions, death due to suicide, death due to involvement in war or riots, or death due to criminal activity.

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