Term insurance provides temporary life insurance. Numerous provisions could prevent you from receiving the final payout when choosing a term insurance plan. It’s important to know which kinds of unfortunate passing away term insurance doesn’t cover. Read on.
If the life insured passes away, term insurance policies provide high financial protection to the family at a low cost. If the insured breathes his last during the policy, the beneficiary receives a lump sum.
The insurance company won’t pay if the life insured passes away while driving drunk or intoxicated. If the life insured didn’t disclose these practices when buying term insurance, the insurance company wouldn’t pay. Accidental passing away due to drunk or drugged driving – the life insurer will deny the claim if the insured passed away while driving drunk or high on drugs.
Risky activity-related passing away is not covered by term insurance. These actions could endanger the life insured.
Passing away due to adventure sports
If the life insured skydives, paraglides, parachutes, or treks, you must disclose this when buying the policy. Since this is a significant misrepresentation, the insurer is not required to accept the claim.
Pregnancy complications
If the life insured passes away during pregnancy or childbirth, the insurer will not pay the nominee the sum assured. Passing away due to pregnancy-related issues is not covered by term insurance.
Passing away due to pre-existing health condition
The insurer will not pay if the term insurance policyholder passes away from a pre-existing condition. Term insurance does not cover all scenarios. Unless covered by a rider, insurers do not pay for unfortunate ends from self-harm, risky behaviour, sexually transmitted diseases like HIV or AIDS, or drug overdoses. The term insurance calculator can help you figure out the premiums paid in the policy.
Passing away due to illegal activity
Case 1: If the nominee is a criminal and the life insured passes away, the insurer will not pay the claim. The insurance company will only pay if and when the nominee wins in court.
Case 2: If the policyholder passes away due to criminal activity, the term insurance company will not pay the claim if the life insured is murdered. The policy does not cover passing away from illegal activity as defined by law. The nominee will receive the claim if the policyholder has a criminal record but passes away from a natural disaster like the flu, dengue fever, or lightning.
Passing away by suicide
If the policy is non-linked, the beneficiary receives 80% of the premium paid if the insured commits suicide within the first 12 months. If a linked plan policyholder commits suicide within 12 months of policy start, the beneficiary receives 100% of the premium paid. The policy will be cancelled if the policyholder commits suicide after one year. Some life insurance companies cover suicide. Check the premium amount the policyholder will have to pay using the term insurance calculator.
Lifestyle exclusions do exist. The policy must mention smoking. Then the insurance company will charge more for smoking-related risks. Chain smokers will be risky for insurance companies. You may be denied insurance if you lie about smoking.
Let’s examine term insurance’s exclusions.
Self-inflicted injury: The insurance company will deny the claim if passing away was caused due to self-injury or dangerous activity.
HIV/AIDS: If the policyholder passes away due to HIV or AIDS, the insurance claim will be denied.
Intoxication: If the policyholder passes away due to alcohol or drugs, the insurance company can deny the term insurance benefits and claim.
Homicide: The insurance company will deny the claim if the nominee murders the policyholder. The insurance company will hold the claim until the nominee is acquitted.
Natural disasters: Life insurance companies will not cover natural disaster-related unfortunate ends unless the policyholder purchases a rider.
Life insurance policyholders are not required to disclose lifestyle changes. However, if you become addicted to smoking after buying the policy, the insurance company should process the claim without any problems. The insurance company’s grievances cell or the Insurance Regulatory and Development Authority can help with policy claims. #
Which unfortunate ends does term insurance cover?
Term insurance covers the following unfortunate ends and illnesses.
The policy beneficiary will receive the sum assured if the policyholder passes away from a critical illness or medical condition. Check the term insurance benefits clauses to get all the details.
Term plans cover accidental passing away. Many term life plans also have accidental death benefit riders that pay the beneficiary an extra sum assured if the insured passes away accidentally. So be sure to read the fine print and all the clauses before you purchase a term life insurance that will be used to protect your family’s financial future.
