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Features
Ref. No. KLI/22-23/E-BB/492
The deaths due to homicide, intoxication, man-made calamities, hazardous activities, suicide, and pre-existing health conditions are not covered by term Insurance.
Term insurance is an excellent way to ensure the financial wellbeing of your loved ones in case of any eventuality. These policies come with affordable premium rates and offer a lump sum death benefit to the beneficiary.
However, there are a few instances that can lead to rejection of the claim. If you have a term insurance policy or are planning on purchasing one, it is vital to know about them.
Case I: The nominee is responsible
The claim will be rejected by the insurer if the policyholder is murdered by the nominee. In such cases, the payout will not be made unless the murder charges are dropped or until the nominee is acquitted in a court of law.
Case II: The policyholder was involved in a criminal activity
In case the policyholder’s death occurred due to their involvement in criminal activity, the insurer will not settle the claim.
Case III: The policyholder’s death is caused by a terrorist attack
The insurer might reject the claim in case the death occurs due to a terrorist attack. Many insurance companies do not offer a cover for such incidents. Check with your insurance provider for this.
If the death of the policyholder occurs while driving under the influence of alcohol or due to an overdose of narcotic substances, the death benefit will not be paid by the insurance company. 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 man-made disasters like an invasion, war, foreign hostilities (declared or undeclared), an act of foreign enemy, truce (armed or unarmed), mutiny, civil war, rebellion, insurrection, revolution, civil commotion, riots, strikes, power usurpation, military usurpation, etc. If the policyholder dies because of these man-made calamities, the claim will be rejected by some insurers. Check your policy details to confirm whether death due to natural calamities is covered or not.
Activities such as skydiving, parachuting, paragliding, and hiking can lead to fatal accidents and pose a threat to the policyholder’s life. As a result, such incidents are not covered by term insurance. If you engage in these activities, then you must disclose this information to the insurer while purchasing the policy to avoid the rejection of your claim later.
In case the insured person commits suicide within the first 12 months of the policy term, then the nominee is not bound to get any death benefit. However, most insurers offer coverage for suicidal death from the second year onwards.
If the policyholder dies because of a pre-existing medical condition that they may have had before purchasing the term insurance policy and did not disclose, the insurer has the right to not accept the claim. Similarly, death due to self-inflicted injuries or sexually transmitted diseases like HIV is not covered either.
While a term insurance policy has a few exceptions, it is an excellent financial tool to keep your loved ones protected and offers a wide host of benefits:
1. You get high coverage amount at extremely affordable premiums
2. You can pay the premium payment options – single pay, limited pay and regular pay
3. For regular and limited pay options you can pay yearly, half-yearly, quarterly or monthly premiums
4. The sum assured can be availed by the nominee in varied ways – 100% lump sum payout, level recurring payout, and increasing recurring payout.
5. The death benefit paid to the nominee is exempt from taxes under Section 10 (10D) of the Indian Income Tax Act.
Buying a term life insurance plan is your way of keeping your family financially secure after your untimely demise. This is why it is important to always check the terms and conditions of your policy carefully. Always compare the features, coverage and exclusions before buying a term insurance plan.
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.
