Death Cases that Will Never be a Part of Your Term Insurance
The reason term plans have accelerated towards popularity is their cost-effectiveness and popularity. Moreover, you also get a lump-sum amount in the case of death claim. The riders and benefits that are offered on term plans help the policyholder and their family in making the most of their plan.
When you buy a term insurance, you invest your money for one of the most important things in life- your peace of mind.
In case of the untimely demise of policyholder, the beneficiary or nominee receives the payment of death claim from the insurer. Such a process is known as claim settlement, and the death benefit received is called the payout.
Although term plans provide coverage for sudden deaths, there are certain death instances that will not be counted under the policy. We have listed below the death cases that will not included in a term insurance policy.
Murder of the Insured Person
Situation 1: Nominee himself/herself is the Criminal
The insurance provider will not settle your claim if the insured person is killed and the investigations show that the nominee or the beneficiary was somehow a part of the crime.
Situation 2: If the policyholder dies because of their involvement in some criminal activity
The insurance provider will never approve the claim request if the insured has been killed because of the his or her involvement in some criminal activity.
Hiding Your Smoking Habit
If in case you are smoker, especially a chain smoker at that, you must inform the insurer about this habit before you obtain the term plan. Those who smoke have a higher health risk and the insurance providers add an extra amount to your premium.
If you have not informed the insurer about this before taking the policy, and the reason behind your death has something to do with your smoking, there are chances the provider will never settle the claim.
If the Reason for Death is Consumption of Alcohol
We have seen enough advertisements to know that smoking and drinking are injurious to health. If the policyholder passes away because of drinking and driving, or driving after taking narcotic substances, the provider will reject the insurance claim.
The claim will also be rejected in case the policyholder dies because of a condition that was caused due to excessive consumption of alcohol.
Death While Participating in a Dangerous Adventure
If the policyholder dies while he or she was participating in a hazardous activity or adventure, it will not be covered by your term insurance policy. Such activities are a threat to the policyholder’s life and might lead to fatal accidents.
If the insured person commits a suicide in the first year of the term of the policy, the beneficiary or nominee won’t receive the death benefit. But, most of the insurance providers offer coverage starting from the second year from the purchase date, depending upon the terms & conditions of the policy.
Death Because of Child Birth
In case the insured passes away because of complications in pregnancy or while childbirth, the insurance provider will not pay the coverage amount to the nominee of the policy.
Death Caused by a Natural Disaster
Natural disaster is something that cannot be controlled by mankind. If the policyholder happens to die because of a natural disaster such as a hurricane, tsunami, earthquake, or any other natural calamity, then your beneficiary will not receive the insurance claim.
Reason for the Death is a Pre-Existing Medical Condition
If the insured passes away because of a condition, which he or she was already suffering from while obtaining the term insurance will not be taken into consideration by insurance provider. Hence, the claim settlement will not take place for this kind of death.
The Parting Words!
The reason behind term plans getting popularity in the recent time is their benefits including cost-effectiveness, easy to buy processes, and affordability amongst others. Death benefit is the main inclusion of the term policies. However, there are certain kinds of deaths, as mentioned-above, which are not counted by the insurance company for claim settlement or payout.
Moreover, it is important to be honest with your insurer about your lifestyle as well as medical history. You should also remember to go through the policy documents carefully so that you are properly aware about the inclusions & exclusions of the policy. This will help you in preventing any kind of discrepancy that may arise during the claim process.