Types of Death Covered and Not Covered in a Term Insurance

What Are The Reasons For Term Insurance Claim Rejection?

Now that we have understood what kind of deaths are not covered in a term insurance plan, the other causes for a term insurance claim rejection are as follows:

• Non-Disclosure or False Information:
  Providing inaccurate personal details, such as age, profession, and health history, can lead to claim rejection. Verify policy documents for any discrepancies and inform the insurer promptly.

• Lapse in Policy:
  Failure to pay premiums results in policy lapses. If the policyholder dies during this period, no death benefit is paid out. Timely premium payments are crucial to ensure policy coverage.

• Nominee Details:
  Failing to appoint or update a nominee may complicate the claim process, requiring legal documentation. Keeping beneficiary details current ensures a smooth and swift claim settlement.

• Undisclosed Medical Tests:
  Insurance providers conduct medical tests, especially for higher age or risk coverage. Failure to submit these tests may lead to claim rejection, as the insurer may attribute the death to a pre-existing condition.

• Policy Exclusions:
  Insurance policies list specific exclusions, such as suicide or death under intoxication. Claims for deaths falling under these exclusions are not valid.

• Hiding Other Insurance Policies:
  Disclose existing life insurance plans, as they impact the sum assured eligibility. Failure to do so may limit the coverage amount and affect claim settlements.

• Delay in Filing for Claim:
  Promptly informing the insurer of the policyholder's death is crucial to avoid claim rejection. Delay in filing can lead to investigations into the cause of death, potentially complicating the process.

* You can use the term insurance premium calculator to find the plan that fits within your budget.

What Are The Types Of Death Covered In Term Insurance?

Now that we have taken a look at what kind of deaths are not covered in a term insurance plan, let us see which type of death is covered in term insurance plans:

• Death because of natural causes or health-related problems
  Term insurance plans cover natural death or death caused by health-related issues. If the policyholder dies due to any critical illness, medical conditions like heart attack, certain stages of cancer, kidney failure, natural calamities like floods, tsunamis, earthquakes, and other such acts of god, the policy's beneficiary will get the Sum Assured as the death benefit. However, it is always suggested that you check in with your insurer or insurance advisor to get a better understanding of the deaths covered and not covered in specific term plans.

• Accidental Demise
  Term plans also provide coverage in case the insured dies due to an accident, such as a motor vehicle accident, fire injury, electric shock, drowning in a river, etc. Moreover, many best term insurance plans come with an additional accidental death benefit rider under which an extra sum assured is paid to the beneficiary of the policy along with the Basic Sum Assured in case of accidental demise of the insured person.
  However, anyone who understands what is term insurance, knows that there are certain exceptions to this, such as involvement in any type of criminal activity, etc. Claims for this death insurance policy can be rejected if the accident is related to the following cases:

  • Driving under the influence of alcohol or drugs

  • Participating in adventure sports like racing, skiing, mountaineering, or skydiving

  • Flying in an unlicensed or non-passenger aircraft

  • Involvement in strikes, riots, or arson

  • Engaging in criminal or illegal activities

  • Exposure to nuclear, biological, or chemical radiation

• Deaths due to Terrorist Attack
  Various term insurance providers do cover deaths due to a terrorist attack, however, it is important that you check with your insurance provider to get a better understanding of what kind of deaths are not covered in a term insurance plan by the specific insurers.

• Deaths due to COVID-19
  With the increasing pandemics worldwide, various death insurance policy seekers wonder whether a term insurance plan would involve coverage for the disease. Term plans offer coverage for death occurring because of COVID, provided an individual contracts the disease after buying the policy and not before.
  *The T&Cs of exclusion might vary from insurer to insurer. 

Why Should You Buy Term Life Insurance Plans?

The most common reason for buying term insurance is to ensure comprehensive coverage for your family. Term plans provide a death benefit if the life insured passes away during the policy term, provided all premiums are paid. This guaranteed benefit helps secure your family’s finances and offers peace of mind in the event of an unfortunate incident. However, it is important to understand what kind of deaths are not covered in a term insurance plan. Certain situations and causes of death are excluded, and claims filed under these circumstances may be rejected. To make an informed decision and avoid surprises during claim settlement, it is essential to know which type of death is covered in term insurance and what is not covered in term insurance.

Wrapping It Up!

Before purchasing a term life plan, insurance buyers need to review the policy documents to get a better understanding of what kind of deaths are not covered in a term insurance plan. Proper knowledge of both the policy's inclusions and exclusions can help the policyholder avail the coverage and prevent any type of discrepancy during the claim processing.

Note: You should also check the benefits of term life insurance if you are planning to purchase the term insurance plan.

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