Types of Deaths Covered and Not Covered by Term Insurance

When it comes to securing the future of your loved ones or doing proper financial planning, term insurance turns out to be one of the most popular options for insurance seekers. With affordable premium rates, term insurance plans provide financial protection to the family of the insured in case of any eventuality. A lump-sum death benefit is paid to the beneficiary, in case of demise of the insured during the policy tenure.

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Even though term insurance plans are specifically designed to provide insurance coverage to the beneficiary of the insured person, there are certain excluded death events too. In this article, we are going to briefly discuss the types of deaths that are covered & not covered by term insurance plan.

Natural Death or Death caused by Health-related Issues

The natural death or death caused by health-related issues is covered by term insurance plans. In case the policyholder dies due to any type of critical illness or medical condition, the beneficiary of the policy will get the Sum Assured as the death benefit.

Accidental Demise

Term plans also provide coverage in case of the death of the insured due to an accident. Moreover, many term life insurance plans come with an additional accidental death benefit rider under which 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.

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Death by Suicide

In case the insured commits suicide during the initial 12 months from the date of policy commencement, the beneficiary is eligible to receive 80% of the premium paid if the policy is a non-linked one. In the case of linked plans, if the policyholder commits suicide during the initial 12 months from the date of policy commencement, the beneficiary of the policy receives 100% of the total premium paid.

However, if the policyholder commits suicide after the completion of 1 year of the policy or after one year of policy revival, the nominee gets the full SA (Sum Assured) or death benefit according to the policy clauses. Certain life insurance companies may or may not provide coverage for suicidal death. Moreover, insurance buyers need to go through the terms and conditions of the policy and know the inclusions and exclusions of the policy before purchasing it.

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Self-Inflicted Injuries

In case the death of the insured happens due to self-inflicted injuries or a hazardous activity, the claim made by the beneficiary will be rejected by the insurance company.

HIV/AIDS

The insurance company will not accept the claim if the death of the insured occurs due to any type of sexually transmitted disease like HIV or AIDS.

Intoxication

If the policyholder dies due to an overdose of drugs or alcohol, then the insurance company will not provide any death benefit to the beneficiary.

Homicide

In case the insured gets murdered by the beneficiary and the investigation reveals the involvement of the nominee in the crime, the insurance company will reject the claim. The claim request will be put on hold by the insurance company until the beneficiary gets the clearance.

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Tsunami or Natural Calamity

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

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Claiming for More than Two Policies

If the beneficiary makes claims for two or more term insurance policies, then they should follow the steps as per the guidelines of the Insurance Regulatory and Development Authority of India.

The nominee should submit the details of the existing term life insurance plan while purchasing a new one. The information on the policy should be provided in the proposal form. The nominee will have to present the insured's death certificate to the insurance company. The new insurance company will verify the information with the existing insurer. After the verification is completed, the beneficiary receives the claim.

*All savings are provided by the insurer as per the IRDAI approved insurance plan. Standard T&C Apply

The Bottom Line

Before purchasing a term life plan, insurance buyers need to go through 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

  • What kinds of death are not covered in a term insurance plan?

    Ans: Term insurance plans do not provide coverage for deaths due to:
    • Natural Calamities 
    • Terrorist attacks 
    • An undisclosed habit/disease 
    • Sexually Transmitted Diseases such as HIV/AIDS
    • Suicide 
    • Accidents because of drugs or intoxication 
    • Involvement of insured in criminal activity
  • Which type of death is covered in a term plan?

    Ans: Any health-related or natural death will be covered under term insurance plans. In case the life assured dies because of any type of medical condition or critical illness, the nominee will be paid the sum assured as the death benefit. Accident deaths are also covered by term plans such as motor vehicle accidents, fire injury, electric shock, drowning in a river, etc.
  • Does Term Insurance Cover Normal Death?

    Ans: Term insurance, under normal conditions, covers all types of deaths that might fall under illness-related, accidental, or natural death. While all these types of death are natural causes and can cause financial difficulties to the family and dependents.
  • What is 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 amount of sum assured on death due to accident.
  • Does accidental death insurance cover natural death?

    Ans: Deaths from natural causes or illnesses are not covered under accidental death insurance.
  • Does Term Insurance cover suicide?

    Ans: 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. However, most insurance companies provide coverage for suicide from the 2nd year onwards from the purchase date of the policy, subject to T&Cs.

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