Different types of death get covered under a term insurance policy. In addition to that, there are a few types of death that don't fall under the plan. In a term insurance policy, nominees get a death benefit when the policyholder passes away. The payout of that benefit depends on the type of death the policyholder had.
In this blog, we have covered the list of deaths that are covered and not covered under a term plan.
Generally, term insurance plans cover natural deaths that happen due to any disease or medical condition of the policyholder. For example, the policyholder passes during their sleep due to a heart attack. In this case, the sum assured will be paid to the nominees or beneficiaries as the plan covers natural death or death due to such medical condition.
Deaths caused due to accidents are covered by term insurance policies. However, if the accident happens due to intoxication, or under the influence of drug then life insurer will reject the claim made by the nominees. If the policyholder passes away in an accident due to any criminal or unlawful activity, the insurer is not liable to pay the claim.
Mentioned below are some of the probable causes of the claim being rejected in case of an accident death:
✓ Driving under the influence of alcohol or any other kind of narcotic drugs
✓ Engaged in adventure sports activities. It may include rally racing, skiing, mountaineering, skydiving, and similar activities
✓ Flying in an unlicensed or non-passenger aircraft
✓ Taking part in a strike, rioting or arson
✓ Part of a criminal or illegal activity
✓ Exposed to nuclear, biological or chemical radiation
Nominees receive the term insurance payout if the policyholder commits and passes away suicide within a year of buying the policy. Regulatory rules for linked and non-linked policies may vary. The rules for payout in case of a suicide vary for policies bought before and after 2014.
Individuals must declare their health conditions while buying the policy as it may later lead to rejection of the claim if any such information is hidden. Any pre-existing health condition must be declared to the insurer while buying life insurance.
Insurance companies provide coverage if the policyholder would have chosen an optional rider for covering death due to natural disasters. For example, if a policyholder passes away in a Tsunami, flood, cyclone, or any other natural calamity, the beneficiaries can claim the benefits.
Apart from the above-listed conditions, there are a few other situations where term insurance is not paid out to the nominees:
✓ Homicide: If the policyholder dies due to a murder committed by the nominee(s).
✓ HIV/AIDS: If death of the policyholder takes place due to sexually transmitted diseases.
✓ Intoxication: If the policyholder dies due to consumption of alcohol or any other narcotic drugs.
iSelect Smart360 Term Plan provides comprehensive coverage with whole life cover, return of premium, block your premium option, critical and terminal illness coverage, and a range of other benefits.
With this term plan, the policyholder can get back all the premiums they have paid throughout the term if they outlive the policy term.