What Types of Deaths Are Covered in a Term Insurance Plan?
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What Types of Deaths Are Covered in a Term Insurance Plan?

If insurer doesn't know what types of death are not covered in Term Insurance Plan, the insurer will not honour the claim. So, read on to be aware.

  • Oct 11, 2021
  • 885 Views

In the wake of the Covid-19 pandemic, many term insurance policyholders are re-verifying what kind of deaths are covered by their respective policies. While a term insurance policy provides coverage for death due to natural causes, it has its limitations.

A term plan does not cover deaths caused by alcohol intoxication and drug abuse. When the policyholder’s family raise a claim request, the insurance company investigates the cause of death. If the end is caused due to conditions that are not covered under the policy terms, the insurer will not honor the claim.

So, it is crucial to understand what kind of deaths are covered under term life insurance.

Let us look at the type of deaths covered in term insurance.

Natural Death

Term life insurance plans cover natural death or death caused by any health-related issue. For example, suppose the policyholder passes away due to any critical illness or medical condition. In that case, the nominee can expect to claim the insurance and be paid the death benefit without any problems.

Death Due to Covid-19

The recent spike in mortality due to Covid-19 sent policyholders into a frenzy, seeking clarity on whether a death due to disease was covered under term plans. Finally, the government clarified that death due to Covid-19 came under health-related death, and existing term plans very much cover it.

Accidental Death

Deaths from car accidents are types of death covered by term insurance. An accidental death entitles the nominee to the basic sum assured amount. Insurance providers also offer an accidental death rider that promises an additional sum over the basic sum assured in case of accidental death.

However, there are some cases where accidental death claims may be rejected. For example, the claim may be refused if the accident occurred because of alcohol intoxication while driving, for example, or during criminal activity. In addition, accidental deaths due to adventure sports are also not covered under a basic term plan.

Death by Suicide

If the policyholder dies by suicide within the first 12 months of the commencement of the term plan, the family receives 80% of paid premiums. In the case of a linked plan, the family stands to receive 100% of the paid tips.

If the policyholder dies by suicide after 12 months of the commencement of the policy, then the nominee shall receive the entire assured sum. Please ensure you read the terms and conditions of your policy before buying since many insurers do not provide coverage for death by suicide.

HIV/AIDS

Very few insurance providers provide benefits when HIV/AIDS or other sexually transmitted infections are the cause of death. This kind of incident is typically not covered.

Intoxication

Very few insurance providers provide benefits when HIV/AIDS or other sexually transmitted infections are the cause of death. This kind of incident is typically not covered.

Self-inflicted injuries

If the insured individual passes away due to self-inflicted harm or dangerous conduct, the insurance company has the power to deny the nominee’s claim.

Natural Calamity

Unless the policyholder chooses an additional rider, the insurance company will not pay for deaths that occur as a result of any natural disaster.

Homicide

If the policyholder’s death was caused by the nominee’s murder, the insurance company denies the claim. If necessary, the corporation may postpone it until the nominee is declared exonerated.

Deaths not Covered by Term Plans

  • Death due to alcohol consumption or any other intoxicating substance
  • Death due to self-inflicted injuries
  • Death due to HIV/AIDS or other Sexually Transmitted Diseases

Final Word

The death coverage terms of a term insurance policy may vary from insurer to insurer. Hence, you must be informed about your policy terms to avoid filing a false claim.

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