Term life insurance provides a fixed amount to the nominee or beneficiary in the unfortunate event of the insured person’s death during the policy term. Term life insurance is one of India’s most affordable and popular forms of life insurance, as it offers significant coverage at low premium rates.
However, term life insurance does not cover all types of death cases. Some exclusions and conditions apply to term life insurance policies, which may result in the rejection of the claim or the reduction of the benefit amount. Here, we will discuss major death cases which are not covered under term life insurance in India and why.
Types of Death that Term Plan Does Not Cover
Death due to suicide
One of the most common exclusions in term life insurance policies is death due to suicide. Suppose the insured commits suicide before the completion of one year of buying the policy or reviving the policy. In that case, the claim will be rejected, and no benefit will be paid to the nominee. This is because suicide is considered a deliberate act of ending one’s life, which is not a risk that the insurance company can cover.
However, suppose the insured person commits suicide after one year of buying or reviving the policy. In that case, the nominee will get 80% of the total premium paid or the policy’s surrender value, whichever is higher. This is per the guidelines issued by India’s Insurance Regulatory and Development Authority (IRDAI) in 2014.
Death due to pre-existing diseases
Another common exclusion interm insurance policy is death due to pre-existing diseases or illnesses. Pre-existing diseases or illnesses are those that the insured person was suffering from or diagnosed with before buying the policy. If the insured person dies due to such diseases or illnesses within a specified period, usually 2 to 4 years, the claim will be rejected, and no benefit will be paid to the nominee.
This is because pre-existing diseases or illnesses are considered known and foreseeable risks that the insurance company cannot cover.
Death due to adventure sports or hazardous activities
Death due to adventure sports or hazardous activities is another common exclusion in term life insurance policies. Adventure sports or hazardous activities involve a high degree of risk, danger, or thrill, such as skydiving, bungee jumping, scuba diving, mountaineering, racing, etc. If the insured person dies due to such activities, the claim will be rejected, and the nominee will receive no benefit.
This is because adventure sports or hazardous activities are considered voluntary and avoidable risks which the insurance company cannot cover.
Death due to natural calamities or acts of God
Another common exclusion in term life insurance policies is death due to natural calamities or acts of God. Natural calamities or acts of God are those that are beyond human control, such as earthquakes, floods, landslides, cyclones, tsunamis, etc. If the insured person dies due to such events, the claim may be rejected or reduced, depending on the policy terms and conditions.
Death due to war, terrorism, or civil unrest
Another common exclusion in term life insurance policies is death due to war, terrorism, or civil unrest. War, terrorism, or civil unrest involves armed conflict, violence, or disturbance, such as riots, strikes, coups, etc.
This is because war, terrorism, or civil unrest are considered extraordinary and exceptional risks that the insurance company cannot cover.
Death due to murder or homicide
Another common exclusion in term life insurance policies is death due to murder or homicide. Murder or homicide is the intentional and unlawful killing of another person. If the insured person dies due to murder or homicide, the claim will be subject to investigation and verification by the police and the insurance company.
This is because murder or homicide is a criminal offence which may involve the involvement or complicity of the nominee or the beneficiary. The insurance company will verify the facts and circumstances of the death and the role and relationship of the nominee or the beneficiary. Suppose the nominee or the beneficiary is found to be guilty or involved in the murder or homicide. In that case, the claim will be rejected, and no benefit will be paid to the nominee or the beneficiary.
Death due to alcohol or drug abuse
Another common exclusion in term life insurance policies is death due to alcohol or drug abuse. Alcohol or drug abuse is the excessive and harmful consumption of alcohol or drugs, such as liquor, tobacco, narcotics, etc.
This is because alcohol or drug abuse is considered as a self-inflicted and irresponsible risk, which the insurance company cannot cover.
Death due to fraud or misrepresentation
Death due to fraud or misrepresentation is another common exclusion in term life insurance policies. Fraud or misrepresentation is the deliberate and dishonest concealment or distortion of facts or information, such as age, income, occupation, health, etc. Always share accurate information and use a term plan calculator to maximise policy perks.
Conclusion
Under the term plan, the insured person must maintain a healthy lifestyle and is expected to provide accurate and complete information when buying the policy. Any falsification or manipulation of facts or self-inflicted cases can lead to the cancellation of the policy and the denial of the claim.
