Types of death that Term Insurance Plan covers and do not cover
Securing loved ones is indeed everyone’s primary concern; thus, we all focus on preparing a balanced financial plan keeping in mind the present and future spends as well as expenses. Term Life Insurance is pure protection that provides financial security to policyholder’s family in case of his or her sudden demise. This is the primary reason why majority of people invest in term life insurance.
But do you know that the insurance providers have classified untimely deaths into different categories, based on which they determine what to cover and not cover? Followed by which the insurance providers accept or reject the death benefit amount. To understand this aspect in a better way, let us know about the different types of deaths covered and not covered under term life insurance.
Natural death: Natural death refers to the death due to health-related problems. And this kind of death is secured by term insurance plans. In case the policyholder gets diagnosed with any ailment or disease and eventually succumbs, then the nominee(s) of the policy is eligible to receive the insurance payout.
Accidental death: If the person’s demise is due to a mishap, then it is covered under a term insurance plan. Such as in case the policyholder met with an accident and passed away, then the insurance providers will pass the death benefit to the dependents of insured. However, if the policyholder found to be under the influence of alcohol or drugs or associated with any crime or getting away after breaching the law, leading to his or her accidental death, in that scenario the insurance claim gets rejected. Moreover, death due to adventure sports like rafting, skydiving, trekking etc. is also not covered under the term insurance policy.
Suicide: If the policyholder commits suicide within the first year of the policy commencement date then; in case of non-linked policy, the nominee will get at least 80 percent of the total premiums paid till the date of death. And in case of linked policy, the nominees get 100 percent of the total premium paid. However, in case of the insured’s demise after completion of one year of the policy, then the term insurance policy is deemed complete. Although certain insurance providers may or may not include death by suicide in their terms and condition, hence, it is imperative to go through policy terms and conditions carefully and understand the inclusion and exclusion in a term life insurance plan.
Homicide: In case the policyholder gets murdered by the beneficiary, and the investigation reveals the involvement of the same in the murder, then the insurance pay-out amount is rejected by the insurance providers till the charges are dropped.
Death due to HIV/AIDS: If the policyholder dies due to HIV, AIDS, or any sexually transmitted disease, then in such cases the insurance company do not provide any coverage for the same.
Death due to alcohol or drugs: The insurance company do not provide any coverage if the death of the insured happens due to overdose of drugs or alcohol.
Death due to natural calamities: In case of policyholder’s death because of any natural disasters, then the insurance company does not provide any coverage unless the policyholder has taken any add-on rider.
Many individuals select life insurance coverage; so, that their dependents are financially secured in case of their demise. In short, it acts as a saviour in difficult times for the dependents of the insured. However, it is equally crucial while buying a term insurance plan that you thoroughly go through the term and condition of the policy he or she has chosen. You can also speak with insurance experts to understand various clause in the policy. BimaKaro is one such online platform that offers multiple term plans from top insurers in India. If you are also looking for term life insurance to protect your loved ones, then it is advised that you take the assistance of BimaKaro insurance experts and choose the right term insurance plan one for yourself and your family.