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Features
Ref. No. KLI/22-23/E-BB/492
Term insurance does not cover deaths within the suicide clause period and those resulting from non-disclosure of material information, engaging in hazardous activities, or criminal acts by the insured.
Term insurance is an excellent way to ensure the financial well-being of your loved ones in case of any eventuality. These policies come with affordable premium rates and offer the beneficiary a lump sum death benefit.
However, a few instances can lead to the rejection of the claim. Therefore, if you have a death insurance policy or are planning on purchasing one, it is vital to know what type of death not covered in term insurance.
Term insurance is a crucial component of financial planning, offering protection to loved ones in the event of the policyholder’s demise. However, it is important to understand that not all causes of death are covered under term insurance plans. While these policies provide comprehensive coverage for most scenarios, there are certain death is not covered by term insurance.
The insurer will reject the claim if the nominee murders the policyholder. In such cases, the payout will not be made until the murder charges are dropped or the nominee is acquitted in court.
If the policyholder’s demise occurred due to their involvement in criminal activity, then death is not covered in term insurance.
Suppose the policyholder’s death occurs while driving under the influence of an overdose of narcotic substances. In that case, the insurance company will not pay the death benefit. Most insurers do not issue term insurance policies to heavy drinkers or drug users. To avoid rejection of the claim, it is paramount that you disclose the history of alcohol consumption or drug use in the proposal form during underwriting.
Death occurring due to unnatural disasters like an invasion, war, foreign hostilities (declared or undeclared), an act of a foreign enemy, truce (armed or unarmed), mutiny, civil war, rebellion, insurrection, revolution, civil commotion, riots, strikes, power usurpation, military usurpation, etc. Some insurers will reject the claim if the policyholder dies because of these artificial calamities. Check your policy details to confirm whether death due to natural calamities is covered.
Activities such as skydiving and parachuting can lead to fatal accidents and threaten the policyholder’s life. As a result, such incidents are not covered by term insurance. Therefore, if you engage in these activities, you must disclose this information to the insurer while purchasing the policy to avoid the rejection of your claim later.
If the insured person commits suicide within the first 12 months of the policy term, then the death is not covered by term insurance. However, most insurers offer coverage for suicidal death from the second year onward.
Suppose the policyholder dies because of a pre-existing medical condition they may have had before purchasing the death insurance policy and did not disclose. In that case, the insurer cannot accept the claim. Similarly, death due to self-inflicted injuries or sexually transmitted diseases like HIV is not covered.
For example - A sudden death while the policyholder is sleeping is considered a natural death. Additionally, if the policyholder develops an illness or becomes unwell and passes away; as a result, such death will also be regarded as a health-related death. A death insurance policy will provide coverage for these kinds of deaths.
You must provide the insurer with all relevant life and lifestyle information. If this information later turns out to be the cause of the policyholder’s death, the beneficiary claim will undoubtedly be denied in such circumstances. Among these frequent examples is declaring a smoking habit. You must also inform the insurer of serious illnesses like cancer or diabetes.
If the life insured’s passing occurred due to driving while intoxicated or under the influence of drugs, the insurance company will reject the claim. Insurance companies seldom provide life insurance policies to heavy drinkers or drug users. The insurance company would refuse the death benefit if the life insured neglected to mention these procedures when buying the death insurance policy. If you drink, you can avoid having your claim denied by accurately disclosing your history of alcohol use (including the kinds and amounts drank) on the proposal form at the time of underwriting.
Understanding the types of deaths covered under a term insurance plan is crucial for policyholders to ensure comprehensive coverage and financial security for their loved ones. The various scenarios in which term insurance provides coverage are:
Term insurance plans typically cover deaths resulting from natural causes or health-related problems such as illness, disease, or medical conditions. Whether it’s a heart attack, stroke, cancer, or any other health-related issue, the policy provides financial assistance to the nominee(s) designated by the policyholder to help them cope with the loss and manage their financial needs.
Accidental death is another scenario covered under term insurance plans. If the policyholder meets with an accident resulting in their demise, the policy provides the nominee(s) with the sum assured or death benefit. Accidental deaths can occur due to various reasons, such as road accidents, workplace accidents, or any unforeseen mishaps.
Term insurance plans also extend coverage to deaths arising from medical illnesses or conditions that lead to the policyholder’s demise. Whether it’s a chronic illness, terminal illness, or any other medical condition, the policy ensures that the nominee(s) receive the financial support needed to cover medical expenses, outstanding debts, and ongoing living expenses.
Given the unprecedented global pandemic, many term insurance plans now provide coverage for deaths due to COVID-19. Policyholders who succumb to the virus are eligible for the death benefit per their policy’s terms and conditions. This coverage offers peace of mind to policyholders and their families during these uncertain times.
Term insurance plans may also cover deaths resulting from natural calamities such as earthquakes, floods, tsunamis, hurricanes, or other acts of nature. In the unfortunate event of such disasters leading to the policyholder’s demise, the policy ensures that the nominee(s) receive financial assistance to rebuild their lives and recover from the aftermath of the calamity.
Losing a loved one is a challenging and emotional experience, and navigating the process of claiming a term insurance policy after their demise can add to the burden. However, understanding the steps involved in the claims process can help streamline the procedure and ensure that the nominee(s) receive the financial support they are entitled to. Here’s a comprehensive guide to claiming a term insurance policy after the policyholder’s death:
The first step is to inform the insurance company about the policyholder’s demise as soon as possible. Contact the insurer’s customer service helpline or your insurance agent to initiate the claims process. Provide the necessary details, such as the policy number, date and cause of death, and the nominee’s information.
The insurance company will provide a list of documents required to process the claim. These typically include:
Complete the claim forms provided by the insurance company accurately and submit them along with the required documents. Ensure all details provided are correct and match the information in the policy documents and death certificate to avoid delays in the claims settlement process.
Once the claim forms and documents are submitted, the insurance company will initiate the verification and assessment process. This may involve verifying the authenticity of the documents, conducting a thorough investigation into the cause of death, and assessing the eligibility for the claim payout.
Upon successful verification and assessment, the insurance company will process the claim and release the claim payout to the nominee(s) designated by the policyholder. The payout amount typically corresponds to the sum assured or death benefit mentioned in the policy, minus any outstanding premiums or loans, if applicable.
Stay in touch with the insurance company throughout the claims process to address any queries or provide additional information as required. Maintain clear and open communication to ensure a smooth and hassle-free claims settlement experience.
After the claim settlement, carefully review the settlement details provided by the insurance company to ensure accuracy. Verify the payout amount, mode of payment, and any deductions made, and seek clarification on any discrepancies or concerns.
Term insurance provides financial security to policyholders and their families in the event of the policyholder’s demise during the term of the policy. However, there are instances where term insurance claims may be rejected, leaving nominees without the intended financial support. Understanding the reasons for term insurance claim rejection is crucial to avoid such scenarios and ensure that policyholders and their families receive the benefits they are entitled to. Let’s explore some common reasons for term insurance claim rejection:
One of the primary reasons for term insurance claim rejection is the policyholder’s non-disclosure or provision of false information during the application process. Failing to disclose pre-existing medical conditions and lifestyle habits such as smoking or drinking or providing incorrect information about income, occupation, or personal details can lead to claim rejection.
If the policyholder fails to pay the premiums within the grace period provided by the insurer, the policy may lapse, resulting in the termination of coverage. In such cases, any claims filed after the policy lapse will likely be rejected. Policyholders must ensure timely payment of premiums to maintain continuous coverage under the policy.
Incorrect or incomplete nominee details provided by the policyholder can lead to complications during the claims process. In cases where the nominee’s information is not updated or verified, the insurer may reject the claim or delay the settlement until the nominee’s identity and relationship with the deceased are established.
When applying for term insurance, policyholders must often undergo medical tests as part of the underwriting process. Failure to disclose the results of these medical tests or withholding relevant medical information can result in claim rejection, especially if the undisclosed conditions are found to be the cause of death.
Term insurance policies typically come with certain exclusions, such as suicide within the first few years of the policy term or deaths resulting from hazardous activities or participation in illegal activities. If the cause of death falls within the policy exclusions, the insurer may reject the claim.
Policyholders are sometimes tempted to conceal the existence of other insurance policies to increase the sum assured or coverage amount. However, failing to disclose additional insurance policies during the application process can lead to claim rejection if discovered by the insurer during the claims investigation.
Submitting the claim documents after the stipulated time period specified by the insurer can result in claim rejection. Nominees need to initiate the claims process promptly after the policyholder’s demise and provide all required documents within the specified timeframe to avoid delays or rejection.
Understanding the types of deaths not covered by term insurance is essential for policyholders to ensure adequate coverage for their specific needs. Policyholders should carefully review their policy terms, exclusions, and conditions to understand the scope of coverage and make informed decisions. Seeking guidance from insurance advisors or professionals can help policyholders navigate the complexities of term insurance and choose a policy that best suits their requirements. By being aware of the exclusions and limitations of their policy, policyholders can ensure that their loved ones are financially protected in the event of their demise.
1
Term insurance plans typically do not cover deaths resulting from suicide within the policy’s waiting period, participation in hazardous activities, self-inflicted injuries, criminal activities, war or acts of terrorism, and deaths outside the policy coverage period.
2
Yes, natural death is covered in term insurance plans. Term insurance provides financial protection to the nominee(s) in the event of the policyholder’s demise due to natural causes or health-related problems.
3
Yes, term insurance plans cover accidental death. If the policyholder dies due to an accident, the nominee(s) receive the death benefit or sum assured as specified in the policy.
4
Term insurance plans cover deaths resulting from natural causes, accidental death, medical illnesses, and other unforeseen circumstances, subject to the terms and conditions of the policy.
5
Yes, term insurance plans cover deaths due to cancer. If the policyholder succumbs to cancer during the term of the policy, the nominee(s) receive the death benefit as specified in the policy.
6
A heart attack is typically considered a natural death rather than an accidental death. However, if the heart attack is caused by an accident or external injury, it may be considered an accidental death and covered by term insurance, depending on the policy terms.
7
Life insurance typically does not cover deaths resulting from suicide within the policy’s waiting period, participation in hazardous activities, self-inflicted injuries, criminal activities, war or acts of terrorism, and deaths outside the policy coverage period.
8
No, term life insurance does not cover all deaths. While it provides coverage for deaths resulting from natural causes, accidental death, and certain medical illnesses, there are exclusions and limitations outlined in the policy terms that may result in claim denial for certain types of deaths.
Amit Raje is an experienced marketer who has worked in various Fintechs and leading Financial companies in India. With focused experience in Digital, Amit has pioneered multiple digital commerce in India. Now, close to two decades later, he is the vice president and head of the D2C business department. He masters the skill of strategic management, also being certified in it from IIMA. He has challenged his challenges and contributed his efforts in this journey of digital transformation.
Prasad Pimple has a decade-long experience in the Life insurance sector and as EVP, Kotak Life heads Digital Business. He is responsible for developing user friendly product journeys, creating consumer awareness and helping consumers in identifying need for life insurance solutions. He has 20+ years of experience in creating and building business verticals across Insurance, Telecom and Banking sectors
Features
Ref. No. KLI/22-23/E-BB/2435
The information herein is meant only for general reading purposes and the views being expressed only constitute opinions and therefore cannot be considered as guidelines, recommendations or as a professional guide for the readers. The content has been prepared on the basis of publicly available information, internally developed data and other sources believed to be reliable. Recipients of this information are advised to rely on their own analysis, interpretations & investigations. Readers are also advised to seek independent professional advice in order to arrive at an informed investment decision. Further customer is the advised to go through the sales brochure before conducting any sale. Above illustrations are only for understanding, it is not directly or indirectly related to the performance of any product or plans of Kotak Life.
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