There is no denying the fact that term insurance plans provide the best life protection feature and that too, at very reasonable rates. In case of death of the policyholder, her/his nomine will receive the lump sum amount. However, there are certain kinds of deaths that are not covered by term plans in India.
Therefore, it’s important for you to be aware of the terms & conditions of the insurance policy to ensure that your family members or dependents are not in for an unpleasant surprise to upon your death.
Below-enlisted are the different types of death that are not covered in term insurance plans:
- Death occurred due to drink and drive cases
- Death due to accident caused by consumption of drugs
- Death due to pre-existing illnesses
- Death due to participating in bike racing and car racing (any kind of racing events)
- Death due to participating in activities like hiking, trekking, water sports, etc. (any kind of adventurous activities)
- Death while in childbirth or pregnancy
- Death caused due to participating in illegal activities
Below-enlisted are few of the exclusions under term insurance plans:
Few of the exclusions are enlisted under the lifestyle category. For instance, if you have smoking habit, it’s important for you to mention it in your policy proposal form. This is because; the insurance provider chosen by you will charge an additional premium to cover the risk of death due to your smoking habit.
In such cases, chain smokers will be a bigger risk to insurers. In case you choose to conceal this information, the insurance providers have the right to reject your claim. In other words, if you abuse your body in any other way which leads to self-destruction such as consuming drugs or alcohol, your policy claim may get rejected.
♦ Suicide–No term insurance policy accepts the claim made in suicidal death cases. Some insurance providers may choose to pay all the premiums paid by the life assured until the date of her/his death after excluding all the policy-related expenses. According to new regulations, the benefits & features of a policy will be null & void if the policyholder commits suicide within one year after the policy subscription.
♦ Self-inflicted injury –In case of death due to participating in a hazardous adventurous activity or self-inflicted injury, the insurance provider has a right to reject the claim.
♦ HIV/AIDS – The insurance company will not submit or process the claim made by the insurance company if the death occurs due to HIV or AIDS.
♦ Intoxication – in case the death of the policyholder has occurred due to over-consumption of alcohol or drugs, the insurance provider has a right to reject the claim.
♦ Homicide –If the death of the life assured happens due to murder committed by her/his nominee, the insurer will reject the claim. In case of an investigation in a proceeding, the insurance provider may put the claim on hold till the nominee is acquitted.
♦ Tsunami – The deaths that happen due to natural disasters such as tsunami will only be covered if the policyholder has opted for additional riders – in absence of which, the life insurance company will reject the claim.
Change in lifestyle
In case there is a change in the policyholder’s lifestyle after s/he has bought the policy, s/he is not under the obligation to share the information. If you build up a habit of smoking after purchasing the policy, your insurance coverage will still be applicable and the insurance company should process the claim without any issues.
In case there are any issues created by the insurance provider while processing your claim, you can always approach the grievances cell of IRDAI directly.
Claiming more than one policy
If you have got more than two term insurance policies and you want to claim both of them, you need to follow the guidelines set by IRDAI. In addition to that, you also need to submit the existence of another term plan while buying the second one. This information needs to be shared by you in the proposal form.
In such cases, the ‘death certificate’ will be submitted to the insurance provider which has the longest association with the life assured. An acknowledgment will be shared with other insurance providers and the information provided by the first insurer will be accepted by other insurers.
A Final Word
In the end, make sure to go through the fine print of a term life insurance policy before buying one. If you are well-informed about the features and benefits of a term plan, it will be easier for you to make an informed decision. For example, if you know the coverage offered by SBI term plan, it will be easy to compare the coverage with other plans. Additionally, it will also help you avoid any issues while submitting a claim request with the provider. Again, as certain deaths are not covered in a term plan, it’s always a smart move to understand the exclusions beforehand and then settle for the best suitable policy as per your needs.