Term Insurance

What Kinds of Deaths Are Not Covered in the Term Insurance Plan?

By Admin
Mar 02, 2021
what kind of deaths are not covered in term insurance

One of the very common options among the seekers for a life insurance policy is the term insurance plan. Term insurance has nominal premium rates and would assure the financial security of the policyholder's family in case of the occurrence of any adverse incident. The nominee of the policyholder would receive a lump sum payout if the death of the policyholder occurs during the policy term of the term insurance.

However, there are some death events too that are excluded from the coverage provided by the term insurance plans.

Let us check out the kinds of deaths that are not covered in the term insurance plans.

The policyholder's murder

In case, the policyholder of the term insurance plan has been murdered then the death would not be covered under the term insurance plan. There can be two scenarios associated with this condition.

a. The case I – In the case of the nominee being the murderer

The term insurance claim for a policyholder who was murdered would not be settled by the insurance provider if the nominee of the policyholder was involved in the murder. The insurance provider would not be making any payout to the nominee until the murder charges are dropped off from him and the case is resolved in his favour.

b. Case II – In case of the death of policyholder was caused due to being involved in any criminal activity

If the policyholder of the term insurance plan was murdered and the reason was involved in some kind of criminal activity, then the claims would not be settled by the insurance provider. But, there can be exceptions in this scenario as well. If the policyholder had a criminal background but the cause of his death is natural uncertainty such as dengue, swine flu, lightning, etc. then the insurance provider would provide the payout associated with the claim.

Non-disclosure of habits like smoking

If an applicant has the habit of smoking, then he must disclose it to the insurance provider while purchasing the term insurance plan. In the case of the applicant being a smoker, there is a higher level of risk to health and would also lead to an additional premium.

If the smoking habit is not disclosed to the insurance provider while purchasing the term plan, then the term insurance claim would be rejected in the future if the death of the policyholder occurs due to health issues arising due to smoking. So, applicants should go through the policy documents carefully and understand the term plan's inclusions/exclusions before the purchase of the term plan.

Any death of the policyholder under the influence of alcohol/drugs

If the cause of death of a policyholder is due to the intake of alcohol or any other narcotic substances, then the term insurance claim would be rejected by the insurance provider. Mostly, the insurance providers do not issue term insurance plans to those who have the habit of excessive alcohol intake or narcotic substances(drugs). In case, a term plan policyholder has hidden his drinking habit from the insurance provider while purchasing the term plan then his death benefit claim would be rejected by the insurance provider in the future.

If an individual is a consumer of alcohol, then the probabilities of claim rejection in the future can be avoided by giving a correct declaration about the history of his consumption related to alcohol at the underwriting stage.

Pre-existing conditions

If the death of a policyholder occurs due to any health condition that existed before purchasing the term insurance plan, then the death benefit payout claim would not be settled by the insurance provider. Moreover, there are some other cases such as any hazardous activities; drug overdose, sexually transmitted diseases, etc. are not covered under the term plan.

Death due to suicide

In case of the policyholder committing suicide within the term insurance plan's first year, no death benefit is obtained by the nominee. Most of the insurance providers offer coverage for suicide from the second year after the purchase of a term insurance plan.

Death caused by hazardous activities

Term insurance plans do not provide coverage for death occurring due to the participation in any kind of hazardous activity. These hazardous activities would act as a threat to the policyholder's life and can cause accidents. If an individual is participating in any kind of adventurous activity like car racing, paragliding, skydiving, parachuting, etc. then he must disclose this while purchasing the term plan. In case, this has not been disclosed to the insurance provider, it would be considered as a material misinterpretation and the claim might be rejected. 

Death caused due to childbirth

If the death of the policyholder occurs due to any kind of complications related to pregnancy or childbirth, then the nominee of the policyholder would not be receiving the death benefit payout of the term insurance plan.

Death due to natural disasters

If the death of a policyholder occurs due to any natural disasters such as an earthquake, a cyclone, etc. then the claim for death benefit payout would not be approved by the insurance provider.

Conclusion

So, policyholders must have a clear understanding of the major death exclusions of the term insurance plans. A proper study of the policy document of the term insurance plan will help you in having knowledge about the coverage provided by the term insurance thus, helping to avoid claim rejection in the future.

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