When it comes to safeguarding the future of our family and loved ones, term insurance is one of the most reliable options trusted by insurance seekers. In today’s digital age, you can seamlessly buy a term plan online with so many online term life insurance plans to choose from, but that in itself is not enough. Apart from being mindful about the best term plan to buy, we must also be well aware of the various challenges that might arise while making a claim. Knowing the kind of deaths covered under term insurance can reduce the chances of claim rejection because of the untimely demise of the policyholder.
Deaths excluded from term plan coverage
- Death due to Terrorist Attack
If the policyholder dies due to a terrorist attack, then such fatalities cannot be claimed under a term insurance policy. It is apparent that one cannot ensure to safeguard against such deaths, but you can always choose to stay alert. Follow the government guidelines regarding being vigilant of suspicious activities.
In case the policyholder commits suicide during the first 12 months since the policy was issued, the beneficiary is liable to receive 80% of the premium amount paid in the event of a non-linked policy. In case of a linked plan, the beneficiary can receive 100% of the premium amount paid.However, if the insured person commits suicide after completing one year of the policy, the policy shall be nullified and terminated. There are some policies that cover mental health issues and offer coverage to suicidal death even after one year of the policy term. Hence, it is important you carefully read the terms and conditions before purchasing your insurance plan.
Death by homicide is indeed covered under an insurance plan. However, if the investigation reveals that the beneficiary was involved in the crime, then the insurance company will reject the claim.The claim request shall be put on hold by the insurance provider until the beneficiary involved in the crime gets clearance of his/her charges.
- Death Outside the Country
If the insured individual is travelling outside the country and dies, unfortunately, then such death shall not be covered under a term insurance plan. Hence, it is advisable to avoid international visits when you are unwell. However, you might have to travel abroad for some special treatments. But one must keep in mind that the beneficiary shall not receive the claim amount if death takes place in a foreign location.Some insurance companies may extend the coverage on the payment of additional premium. You can go through your terms and conditions carefully before purchasing your policy and informing family members about such exceptional cases in advance.
- Terminal Illness
There are certain terminal illnesses such as HIV, Stage 4 Cancer, certain types of Diabetes and some rare, deadly diseases which can cause the death of the policyholder. Such illnesses are not covered under term insurance plans. However, you can always check for various critical illness covers offered by your insurance provider and gain knowledge on their benefits to avoid claim rejections.
- Death by Natural Calamity
If the policyholder dies due to natural calamity such as earthquake, flood, tsunami, landslide, etc., such death shall not be covered under term insurance plans. You must stay aware of this clause and keep your beneficiary updated regarding it. If the beneficiary approaches insurance provider for a claim in such a scenario, it will be rejected.
One of the most important reasons to purchase a term insurance policy is to cover the financial risk our family, or closed ones might face in our absence. The term insurance policy might go waste if our family is not able to avail the death benefit after our demise. Hence, it is important that you read the policy documents carefully before purchasing an insurance plan and be well aware of various clauses that might lead to claim rejection.