What Kind of Deaths are Not Covered in a Term Insurance Plan?

April 28, 2020
What Kind of Deaths are Not Covered in a Term Insurance Plan?

When buying term insurance policy when the sum assured is higher, people often doubt if they would get a complete settlement towards a claim or not. The concern is genuine, life insurance claim rejection is the worst thing that can happen when you are not around. As per the annual report issued by IRDAI, the companies reject about 9,286 out of 8.24 lakh claims per year. Often, rejecting claims is not intentional, there are so many people that expected to fall ill or contract the disease under specific conditions. If a person fails to meet the condition as per the specific policy, the company is bound to reject the claims on certain deaths.

There are certain specifically designed insurance coverage plans that exclude certain death events too. We will briefly discuss the types of death not covered under the plan.

1. Murder of The Policy Holder

If the nominee is a murderer or investigations prove that nominee was involved in any crime, the insurance company can retain death benefit payable. The claim would be settled to the heirs of the life assured.

2. Suicide

If the policyholder commits suicide within a year or policy commencement or revival, the beneficiary will not receive only a part of the 80% premium paid. If the policyholder has a linked plan and commits suicide within a year or policy commencement or revival, the nominee will receive 100% of the sum of premium paid.

3. Accidental death under the influence of drugs or alcohol

If the policyholder has undergone an overdose of drugs or alcohol or there found an influence of alcohol, there would be no compensation to the beneficiaries.

4. Life-Threatening Activities

Many people are fond of sports, you are free to participate in adventuring and hazardous activities, but your insurer is not bound to it. If there is death occurred due to participation in skiing, paragliding, scuba diving, or any other activities, the insurer can reject the compensation for it.

5. Any pre-existing medical condition, not complied under policy terms

If the policyholder or nominee has pre-existing illness or disease, then the company abides to reject the claim. Usually, while purchasing a policy, the applicant has to mandatorily declare all pre-existing illnesses. Insurers often investigate the cause of the death of the policyholder.

6. Any illegal activity involved

If the death of the policyholder is caused due to the participation of illegal activities, then company has the rights to reject the claim. No claim would be settled if the nominee was involved in any sort of criminal activity as per under the law.

7. Pregnancy complication

If the cause of death is due to pregnancy complications or childbirth, then the company would not pay the sum of assured.

8. Natural Disaster

If the policyholder demises due to natural disasters like Tsunami, earthquake, hurricane, then-nominee would not be able to claim from the company.

Bottom Line

Before buying the policy, it is mandatory for the policyholder to undergo the terms and conditions described in policy documentations. You need to understand the inclusions and exclusions of the policy to prevent any discrepancies during the claim procedure.

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