Term Insurance Exclusions - What Is Not Covered in Your Plan?

Written by : Daina Mathew

Reviewed by : Shraddha Tripathi

Shraddha Tripathi

Digital Partnership

With 5 years of experience in the insurance industry, she brings a nuanced understanding of its complexities to her writing. Her expertise allows her to craft clear, insightful content that makes intricate insurance topics accessible and engaging.

2026-03-05

2698 Views

7 minutes read

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Key Takeaways

If premiums are not paid on time, the policy expires, leaving no financial support for the nominee.
Illnesses diagnosed before purchasing the policy might not be covered under the term insurance conditions.
Death due to adventure sports, substance abuse, or criminal acts is often excluded under term insurance exclusions.
Misrepresentation of personal details, medical history, or lifestyle habits can result in claim denial.
If the policyholder’s death results from intentional self-harm or unlawful actions, the claim is denied.

What Do Term Insurance Plans Not Cover?

A Term insurance provides financial protection to your family in case of any unfortunate eventuality. As a beneficiary, your wife, parents or children can receive a lump-sum death benefit in case of demise of the insured during the policy tenure. Even though term plans are among the most affordable and rewarding insurance options one can have, it is better to have complete knowledge about the kind of deaths that are covered under a policy, and also those that are not covered. It is always beneficial to be aware of the terms and conditions of the term insurance policy, to ensure there are no unpleasant surprises waiting for your family members or dependents, when they are already in stress. Term plans are best suitable for planning short to medium term goals. Let’s see what kinds of deaths are typically not covered in term insurance plans in India:

Death due to driving under the influence of alcohol
Death due to a pre-existing health condition
Accidental death due to driving under the influence of drugs
Death due to the participation in adventure sports
Death due to the participation in racing events
Death due to pregnancy and childbirth
Death caused due to the participation in illegal activities

The above mentioned are certain lifestyle influenced exclusions in a term insurance policy. It is important that you mention about your smoking and drinking habits, if you happen to have them, at the time of application of the policy. Following which an insurance company will typically assess the risk of death due to these habits and may charge an additional premium for the cover. However, hiding the information can lead to problems at the time of claim settlement, causing trouble to your family. And in case the information is revealed after application, the company may cancel your policy.

Also Read - Term Plan Meaning

Apart from these previously mentioned pointers, there are some other conditions that are mostly not cover by a term policy:

Self-inflicted injuries: If the cause of death is participation in a hazardous adventurous activity leading to self-inflicted injury, the claim might be rejected by the insurance company.
HIV and AIDS: Insurance claims made against death due to sexually transmitted diseases like HIV or AIDS are not admissible by the insurance company.
Natural disasters: Deaths that caused by natural disasters are not covered by the life insurance company. However, there are often riders available to cover these instances.
Intoxication: Any death that takes place due to the consumption of drugs or alcohol is not admissible and the company has the right to reject its claim.
Homicide: If the policyholder dies due to a murder, the insurance company has the right to put the claim on hold until the acquittal of the nominee. In case the murder is committed by the nominee, the insurance company will reject the death claim.

In cases where certain hazardous life conditions are predictable by the policy holder, insurance companies may offer riders and additional coverage options. It is advised you flourish all information at the time of buying of the policy. Also, if there is a change in lifestyle after allotment of the life insurance policy, the policyholder should ideally share the information with the insurance company to ensure efficient coverage and easy claim settlement, when the time comes.

Any natural death or death due to health-related issues will be covered by insurance plans in India. With critical illness covers, in case of death of the policyholder due to a critical illness or medical complication, the beneficiary will receive the sum assured as the death benefit. Most term plans also provide coverage in case of death of the insured due to an accident or disability caused by an accident. Moreover, term policies also offer the option of choosing from a variety of additional benefits that promise additional sum assured for specific uses like child education.

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Death within First 2 Years of the Policy Term:

For any term life insurance plan, in case an unfortunate event takes place within the first two years of the policy term, the case is considered under Section 45 of the Insurance Act, 1938. It states that the claim will firstly be investigated for fraud, including improper disclosure of information or even misrepresentation. However, after 2 years no claim can be denied on the basis of these grounds. Therefore, the importance of being honest and presenting the correct information with your insurance company cannot be emphasized enough.

The iSelect Smart360 Term Plan by Canara HSBC Life Insurance is ideal for those who have big plans in life and need an insurance cover as flexible as their needs. The plan offers you flexibility to Increase you’re your cover aligned with changing life stages and protection needs at key life milestones, in addition to inbuilt benefits for Accidental Death, Child Support, and Accidental Total and Permanent Disability.

Did You Know?

Denial rates have increased over the last five years, rising by more than 20%, leading to prolonged financial stress for families.

Source

Steps to File a Term Insurance Claim

Filing a claim should be a hassle-free process. Here is the step-by-step guide one can follow:

Notify the Insurer - After the insured person dies, the insurer must be informed as soon as possible.
Gather Required Documents - This may include the original policy document, death certificate, medical records (if applicable), and identity proof for the nominee.
Complete Claim Form - The nominee must fill out the claim form and forward it to the insurer.
Follow Up on the Claim – Stay updated on the claim status and respond promptly to any additional requests from the insurer.
Wait for Claim Processing - The insurer will verify the details before processing the claim. If everything is in order, the insurer will settle the claim in a few weeks.

Conclusion

While term insurance provides financial security, policyholders must understand what is excluded from coverage. Being aware of potential claim rejection reasons can help avoid unpleasant surprises for beneficiaries. Always ensure transparency while purchasing the policy and pay premiums on time to keep the coverage intact. By doing so, one can safeguard their family's future without unnecessary complications.

Glossary

Term Insurance: A life policy offering coverage for a set period, paying a death benefit if the insured passes away during the term.
Nominee: The person entitled to receive the claim benefits.
Premium: The amount paid periodically to keep the policy active.

Disclaimer - This article is issued in the general public interest and meant for general information purposes only. The views expressed in this blog are solely those of the writer and do not necessarily reflect the official policy or position of Canara HSBC Life Insurance Company Limited or any affiliated entity. We make no representations or warranties of any kind, express or implied, about the completeness, accuracy, reliability, suitability, or availability with respect to the blog or the information, products, services, or related graphics contained in the blog for any purpose. Any reliance you place on such information is therefore strictly at your own risk. You should consult with a qualified professional regarding your specific circumstances before taking any action based on the content provided herein.