Type of Deaths Covered in Term Insurance
These days, everyone is hustling to earn more money to upgrade their present lifestyle and at the same time secure their future financially. Also, one seeks different ways to secure the future of their near and dear ones. One of the easiest methods for the financial security of the family is to get oneself covered by a good protection plan. These plans not only provide for financial stability in times of need but also aim to maintain the same lifestyle post the death of the insured or breadwinner of the family.
Protection plans include various types of term insurance plans which can be chosen as per the needs and requirements of every individual. Term plans provide security for risks related to uncertain and unexpected deaths. However, one should go through the terms and conditions of the term insurance policies with utmost care as not only it provides for your risk but also ensures for your future financial stability.
It is very important to go through the policy documents carefully regarding the inclusion and exclusions of the term insurance policy. Various types of life insurance plans are provided by insurance companies, one of them is a term insurance plan.
Term insurance plans are those plans that provide insurance against the risk of life of the insured person. It provides coverage for a pre-determined or specified selected term. Premium has to be paid annually or on a lump sum basis. Under term insurance plans, the nominee receives the prescribed financial death benefits from the term plan only if the insured suffers death as mentioned below. So, in this article, we shall be putting forth the types of death covered under term insurance plans.
1. Death under natural circumstances
Where a person dies due to natural factors like old age etc, the nominee shall receive the benefits as mentioned in the policy agreement. Death due to a natural cause is covered under term insurance.
2. Health-related issues
Death due to a person suffering from any ailment or illness or medical condition is covered under term insurance. It is included in the term insurance policy.
3. Death due to accidents
Coverage is provided by term insurance plans in case of accidental deaths. Term plans also provide for additional accidental death benefit riders. Under accidental death benefit riders, the extra sum assured shall be paid to the nominee or beneficiary apart from the basic sum assured if the insured person dies in an accident.
It is to be noted that death due to the following reasons are excluded from accidental death claims
- Alcohol consumption while driving OR
- Consumption of any type of drugs while driving OR
- Involvement in any criminal or illegal activities
Hence, a claim of a nominee shall be rejected if a person suffers from death due to the above reasons.
4. Making claims for more than two policies
Where a beneficiary or nominee makes an application for two or more term insurance policies then he has to follow the guidelines of IRDA. IRDA stands for Insurance Regulatory and Development Authority of India. It is the apex regulatory body of the insurance sector. To claim the benefits, the nominee shall submit details of the existing term insurance policy while purchasing a new policy.
Details regarding the policy have to be provided in proposal forms. The Insured’s death certificate shall be submitted to the life insurance company. Information shall be verified by the new insurance company with the existing insurer. The beneficiary shall receive the claim after successful verification.
5. Death due to suicide
- The beneficiary shall receive 80% of the premium paid if the policy is a non-linked one. However, such an amount shall be transferred to the beneficiary’s account only if the insured commits suicide during the initial 12 months from the date of policy commencement.
- Where linked plans are involved, the beneficiary of the policy shall receive 100% of the total premium paid only if the policyholder commits suicide during the initial 12 months from the date of policy commencement.
- Where the policyholder commits suicide after the completion of 1 year of the policy, the benefits of the policy will be nullified. Also, the policy shall be terminated.
- However, some of the insurance companies do not provide for suicidal deaths and one should be aware of the terms of the policy before purchasing it.
The bottom line of this article is that buyers need to be aware of the policy – rules, terms, and conditions should be properly read and understood in the same manner as provided in the agreement. It helps in avoiding any confusion or discrepancy at the time of claims.
Frequently Asked Questions
- Accidents involving motor vehicles or by motor vehicles.
- Accidents involving machinery at the workplace
- Accidents causing fire-related injuries
- Accidentally falling from a height, building or rooftop
- Accidentally drowning in water.
Yes, death due to critical diseases like cancer are included in term plans.
Deaths caused due to
- Intoxication or in other words, an overdose of drugs or alcohol or
- If the insured dies due to sexually transmitted diseases or
- The insured person causes harm to himself (self-inflicted injury) or
- Homicide – cases where the nominee was himself involved in the death of the insured.
In the above cases, claims made by the nominee or beneficiary shall be rejected by the life insurance company.