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Types of Deaths Not Covered by Term Insurance

One should use caution when selecting a death insurance policy because several clauses could prevent you from getting the final payout. Continue reading to understand the kinds of deaths that death insurance does not cover.

  • 32,293 Views | Updated on: May 31, 2024

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 about the types of death not covered in death insurance.

Here are some eventualities that are not covered by term insurance policies.

1. Death due to homicide

Case I: The nominee is responsible

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.

Case II: The policyholder was involved in a criminal activity

If the policyholder’s demise occurred due to their involvement in criminal activity, then death is not covered in term insurance.

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. This is because many insurance companies do not offer coverage for such incidents. So again, check with your insurance provider about this.

2. Death due to intoxication

Suppose the policyholder’s death occurs while driving under the influence of alcohol or due to 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.

3. Death due to artificial calamities

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 or not.

4. Death due to hazardous activities

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.

Types of deaths not covered in a term plan insurance

5. Death due to suicide

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.

6. Death due to pre-existing health conditions

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 has the right not to 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.

7. Death due to childbirth

The insurer will not give the nominee the promised sum if the policyholder dies due to pregnancy-related issues or childbirth. Such a death is not covered by life insurance.

8. Death due to an accident

A term insurance plan also includes coverage for accidental fatalities. Some term insurance policies have riders attached that provide an additional sum assured in the event of an accident-related death. A quick, unexpected, and involuntary event brought on by an outside, violent, and obvious force is referred to as an accidental death. The death will be classified as accidental if it results from this accident and occurs without the involvement of any other cause within a set period of time, often (90 to 180 days) following such an event or trauma.

A policyholder has a term plan of ₹25 lakhs that pays an extra sum assured in the event of an accident-related death. On his way to work, Jayesh meets with an unexpected incident that results in a terrible accident. His condition suddenly deteriorates, and things quickly get worse. All medical help ultimately fails, and Jayesh’s family loses him in the accident.

Over ₹10 lakhs was spent on medical expenses, including the costs of several tests, the surgeon’s fees, and the hospital stay. On Deepak’s passing, the family claims the insurance. Because his death resulted from an accident, the corporation pays death proceeds in the amount of ₹50 lakhs. This supports the family’s stability and helps them pay off their medical debt.

9. Death Due to Terrorist Attacks

If an insured person is killed in a terrorist incident, the beneficiary cannot also claim those deaths. Although policyholders cannot guarantee to prevent such a death, they can always exercise caution.

10. Death Due to an Undisclosed Habit or Disease

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 beneficiaries claim will undoubtedly be denied in such circumstances. Among these frequent examples is declaring a smoking habit. Additionally, you must inform the insurer of any serious illnesses like cancer or diabetes.

11. Death due to driving under the influence of alcohol

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. If the life insured neglected to mention these procedures when buying the death insurance policy, the insurance company would refuse the death benefit. 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.

Final Words

While a death insurance policy has a few exceptions, it is an excellent financial tool to keep your loved ones protected and offers a vast host of benefits:

1. You get high coverage amounts at highly affordable premiums

2. You can pay the premium payment options – single pay, limited pay, and regular pay

3. For regular and limited payment 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 essential to check the terms and conditions of your policy carefully. Always compare the features, coverage, and exclusions before buying a term insurance plan.

Case II: The policyholder was involved in a criminal activity

If the policyholder’s demise occurred due to their involvement in criminal activity, then death is not covered in term insurance.

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. This is because many insurance companies do not offer coverage for such incidents. So again, check with your insurance provider about this.

2. Death due to intoxication

Suppose the policyholder’s death occurs while driving under the influence of alcohol or due to 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.

3. Death due to artificial calamities

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 or not.

4. Death due to hazardous activities

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.

5. Death due to suicide

If the insured person commits suicide within the first 12 months of the policy term, then the death not covered in term insurance. However, most insurers offer coverage for suicidal death from the second year onwards.

6. Death due to pre-existing health conditions

Suppose the policyholder dies because of a pre-existing medical condition they may have had before purchasing the term insurance policy and did not disclose. In that case, the insurer has the right not to 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 regarded as 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 term insurance policy will provide coverage for these kinds of deaths

7.Death due to childbirth

The insurer will not give the nominee the sum promised if the policyholder dies as a result of pregnancy-related issues or childbirth. Such a death is not covered in life insurance.

8.Death due to an accident

A term insurance plan also includes coverage for accidental fatalities. Some term insurance policies have riders attached that provide an additional sum assured in the event of an accident-related death. A quick, unexpected, and involuntary event brought on by an outside, violent, and obvious force is referred to as an accidental death. The death will be classified as accidental if it results from this accident and occurs without the involvement of any other cause within a set period of time, often (90 to 180 days) following such an event or trauma.

A policyholder has a term plan of 25 lakhs that pays an extra sum assured in the event of an accident-related death. On his way to work, Jayesh meets with an unexpected incident that results in a terrible accident. His condition suddenly deteriorates, and things quickly get worse. All medical help ultimately fails, and Jayesh’s family loses him in the accident.

Over 10 lakhs was spent on medical expenses, including the costs of several tests, the surgeon’s fees, and the hospital stay. On Deepak’s passing, the family makes a claim on the insurance. Because his death was the result of an accident, the corporation pays death proceeds in the amount of Rs 50 lakhs. This supports the family’s stability and helps them pay off their medical debt.

Final Words

While a term insurance policy has a few exceptions, it is an excellent financial tool to keep your loved ones protected and offers a vast host of benefits:

1. You get high coverage amounts at highly affordable premiums

2.You can pay the premium payment options – single pay, limited pay and regular pay

3. For regular and limited payment 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 essential to carefully check the terms and conditions of your policy. Always compare the features, coverage and exclusions before buying a term insurance plan.

Key takeaways

    Death not covered in Term Insurance Plans are.

  • Death due to homicide
  • Death due to intoxication
  • Death due to artificial calamities
  • Death due to hazardous activities
  • Death due to suicide
  • Death due to pre-existing health conditions
  • Death due to childbirth
  • Death due to an accident
  • Death Due to Terrorist Attacks
  • Death Due to An Undisclosed Habit or Disease
  • Death due to driving under the influence of alcohol

- A Consumer Education Initiative series by Kotak Life

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