What Kind of Deaths Are Not Covered in Term Insurance?

A term insurance policy pays a death benefit to the insured's family in the event of the policyholder's demise before the insurance term. But, not all deaths are covered under the policy. Read on to know more about it.Buying a term insurance policy is one of the best ways to provide financial protection to your family after you are gone. In the event of your untimely demise, before the end of the insurance term, the insurer will pay the death benefit (sum assured amount) to the nominee. But, remember, buying the best plan is not enough; you must be aware of the various challenges that the family members may face while filing a claim.You must be aware of the policy's terms and conditions and know about the kind of deaths that are not covered under the policy. This will help you plan about the ways to manage it better and minimise the risk of filing for a false claim and facing rejection.Let us look at the deaths not covered under term insurance:

• Natural calamity It is a known fact that a natural calamity causes tremendous loss of life and property. Most insurance companies in India do not cover death due to natural calamity like earthquakes, floods, cyclones, tsunami, etc. You must be aware of this and inform the beneficiary about it. In such a scenario, if the nominee files a claim, the insurer will surely reject it.
• Death due to accident Accidents are unpredictable, and it often leads to fatal consequences. Generally, accidental death is not covered under a term insurance plan . However, if you have purchased an accidental death rider or if you have any other specific cover, you can get coverage for the same.
• STDs Most insurance companies in India don't accept death claims for term insurance if the cause of demise is HIV, ADIS, or any other STDs (Sexually Transmitted Diseases).
• Self-inflicted injuries or adventure sports Suppose the cause of the policyholder's death is self-inflicted injuries or participation in adventurous and risky sporting activities like bungee jumping, river rafting, etc. In that case, the insurer will reject the claim made by the beneficiary.
• Substance abuse or addiction Many people who abuse alcohol or are addicted to drugs are not only vulnerable to various illnesses, but they are at high risk of meeting with fatal consequences due to overdose. In such cases, the insurance company will not entertain a death benefit claim.
• Homicide If the beneficiary murders the policyholder and if the investigation proves their involvement in the crime, the insurance company will reject the claim. Generally, the claim request is put on hold until the beneficiary (accused of murder) is acquitted by the honourable court.
• Suicide If the policyholder commits suicide within 12 months from the date of buying the policy, the beneficiary will receive 80% of the premium paid. If it is a linked plan and the policyholder dies due to suicide during the initial 12 months, the beneficiary is eligible to receive 100% of the premium paid. However, if the policyholder commits suicide after 12 months, the policy's benefits will be invalidated, and the plan will be terminated.

While buying a term insurance policy, it is vital to go through the policy documents carefully and understand the terms and conditions. Knowing the policy's inclusions and exclusions can help you get appropriate coverage and avoid discrepancies or legal hassles while filing a claim.

The information contained herein is generic in nature and is meant for educational purposes only. Nothing here is to be construed as an investment or financial or taxation advice nor to be considered as an invitation or solicitation or advertisement for any financial product. Readers are advised to exercise discretion and should seek independent professional advice prior to making any investment decision in relation to any financial product. Aditya Birla Capital Group is not liable for any decision arising out of the use of this information.