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Does a Term Policy Cover Natural Death?

Does a Term Policy Cover Natural Death?

Term Insurance Policy

Although, from the usual conditions, it may seem otherwise, the short answer is yes, term insurance policy covers natural death. If you are familiar with the term insurance conditions, you would think that this is not possible under a normal term cover.

Types of Deaths Covered by Term Insurance

Under normal circumstances the term insurance covers all types of deaths that might fall under Accidental, Illness Related or Natural death. While all of these are natural causes of death and can cause significant financial distress to the dependents and family.

Thus, term insurance certainly helps in these cases by providing the money family needs to meet their life goals and needs. But it does not cover all conditions of the death that may happen under these heads.

Which Deaths Are Not Covered by Term Insurance?

Apparently, a basic term insurance covers a few specific types of deaths. Although the broad categories seem clear enough, the situations leading to death will differ every time. Thus, classifying the cause of death between covered and not-covered sections.

1) Accidental Causes

Accidents on the roads cause more than 1.5 lakh deaths every year in India. If someone happens to have a term insurance cover and meet with a fatal accident, the policy will cover their death, provided they were not:

  • Driving under the influence of alcohol or any other kind of narcotic drugs
  • Engaged in adventure sports activities. Here it’d include rally racing, skiing, mountaineering, skydiving, and similar activities
  • Flying in an unlicensed or non-passenger aircraft
  • Attempting suicide or trying to injure yourself
  • Taking part in a strike, rioting or arson
  • Part of a criminal or illegal activity
  • Exposed to nuclear, biological or chemical radiation

Apart from these, term insurance will also not cover the deaths happening due to war, terrorist attack or any other form of declared or undeclared foreign attacks.

2) Death Due to Illness

Term insurance covers the demise of policyholder (or the person insured) Illnesses leading to the untimely demise. However, you must ensure full and true disclosure about the health of the insured while filling the application form.

Insurers can reject the claim if the insured did not declare the health condition or habits which are harmful to the health at the time of purchasing the policy. Further, the term insurance will not cover the death under the following conditions:

  • Due to an illness which occurred or was diagnosed 48 months before purchasing the policy
  • Due to illness caused by undisclosed smoking or drinking habits

Is Suicide Covered Under Term Insurance?

As per the term policy conditions, death due to suicide is not covered within the first 12 months of the policy tenure. However, the insurer may return up to 80% of the premium received for the cover.

For the period after the 12-month limit is over, we should look at other conditions under accidental and illness related deaths.

Coverage under Typical Term Insurances in India

How Does a Term Plan Covers Natural Death?

If your definition of natural death includes only death due to old age, most life insurance policies will cover this kind of natural death. The online term plan from Canara HSBC OBC Life Insurance, called iSelect Star Term Plan is one such plan which covers death due to old age.

For example, consider that most term policies offer life cover till the age of 80. The average life expectancy in India has been growing consistently over last 50 years. If the trend is to continue average life expectancy will be close to 80 years over the next 50 years.

However, iSelect Star term plan can provide a whole life cover up to the age of 99. That means, even if you are 30 years of age, and buy a term cover for 99 years, you are very likely to incur death claim on the policy.

In other words, your family will receive the death claim benefit, even when you live a normal life and only die of old age. So yes, modern term insurance plans do cover natural death.

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Frequently Asked Questions (FAQs) for Term Insurance Plans

A person can only purchase a term insurance plan till the age of 65 years, and they can choose the risk coverage for up to 99 years of age. One can easily buy the best online term plan between the age of 18 to 65 years.

This being a term insurance plan doesn't offer any payout after maturity or expiration date

Each insurance company has its own term insurance premium calculator. If you want to check out the premium quote, go for the iSelect Star term plan calculator. It gives a premium amount based on your age, gender, habits, education, and annual income.

You can purchase an iSelect Star term plan anytime between 18 to 65 years of age. This is a term plan with return of premium option – that means all the premiums paid throughout the tenure will be paid back to you if you outlive the policy.

It depends on your needs. For example, if you want to cover a child's education or wedding expenses, you have to include them in your coverage. Your premium will be calculated accordingly when you buy the best term plan in India.

If your key purpose is to give your Family financial protection, go for the best term insurance plan. And if you want some savings, in the end, go for a traditional life insurance plan. iSelect Star is a term plan with return of premium option. All the term insurance premium will be paid back to you, if you outlive the policy term.

Go for at least 12 times cover than your annual income. Or you can go as far as 20 times coverage as per your needs.

The right time is when you don't have anything to keep your Family safe from financial storms, and they rely on you for financial needs.

If you are unable to make the payment or suffering from a terminal illness, the best term insurance plan pays a part of the sum insured to treat your disease.

Term life insurance plan riders are attachment or endorsements made, while taking the term insurance policy, as a supplementary coverage to policyholders. Apart from the core death benefit, term insurance plan riders offer below-given additional benefits:

  • Accidental Death Rider When a person suffers from a terminal illness, his/her family ends up spending a significant amount in treatment and medical expenses. Accelerated death rider pays a part of the sum insured in advance to cover such costs and save the family from running out of cash.
  • Accidental Disability Rider If the policyholder can't pay the premium because of an accident or permanent disability, a sudden disability this pays the premium on behalf of the policyholder till completion of policy term or for a defined duration.
  • Critical Illness Rider If the insured person gets a heart attack, cancer, or any other critical illness, this rider pays a lump sum on valid diagnosis.
  • Premium Waiver Rider If the policyholder is unable to make payments due to income loss or disability, a premium waiver rider waives off all future premium payments. And the term insurance policy remains active until the expiration date.
  • Income Rider: This rider in a term insurance plan ensures that your family receives regular income + sum insured in case of unfortunate demise of life insured.

Anyone can go for life insurance as it offers some savings after the maturity date, but it doesn't cover the protection of your family . The best term insurance plan is solely designed for taking care of loved ones if something happens to you. Term insurance plans act as a shield between your family and sudden financial fall. They make sure that your family lives a healthy life even after you. With a little amount paid per year, you can be worry-free from the family's financial conditions.

Questions that you need to ask while Buying the Best Term Insurance Plan?

  1. 1. Are you buying a term plan with return of premium?
  2. 2. Amount of premium you have to pay based on your age, habits, education, and monthly income
  3. 3. The total number of benefits covered in the term insurance plan. Do they include benefits that you care about the most?
  4. 4. How to save money on tax if you pay for the term life insurance plan?
  5. 5. Do they offer regular income options?
  6. 6. Can you change the coverage and premium in the future?
  7. 7. Does the claim consider valid if death occurs outside India?
  8. 8. Which kind of death is not covered by a term insurance plan?
  9. 9. Can NRIs take a term insurance plan? If yes, what are the conditions?
  10. 10. Does the term insurance plan have a cash value if you decide to cancel the term insurance policy?
  11. 11. Under what circumstances can a term insurance plan be cancelled?
  12. 12. Can I pay the premiums online or make electronic payments?
  13. 13. What will happen to the term life insurance plan if the life assured starts smoking after purchasing the policy?
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