As a financial assistant, Term Life Insurance Policy takes the responsibility to cover the death of the policyholder and render financial aid to the nominee. However, in some cases, Term Life insurance Policy abstains from covering the death of the Policyholder.
Let’s take you through the types of deaths that are not covered by Term Life Insurance Policy and why!
Before we move on to talk about the deaths that are not covered by the term life insurance policy, we must understand what it is and why the Term Life Insurance Policy takes responsibility for it.
Death claim, as it is called, is a type of formal request that is made by the nominee of the policyholder that guarantees life cover amount. This happens only if the death of the policyholder occurs in the middle of this period. The provision of a death claim by the Insurance team is simple- to provide the nominee or the family of the policyholder complete financial assistance for a safe life ahead. However, in some cases, the death of the policyholders is not considered or covered.
Deaths due to participating in any detrimental activity like biking, paragliding, parachuting, car racing or even drunk driving are not considered by the Term Life Insurance policy team. Since these adventurous activities lead to material misinterpretation and the policyholder is willingly involved in it, the team does not cover this death. More so, this type of death does not honour the regulation of the policy that deems it necessary for the death to be left uncovered. Other sports activities and hazardous travel activities are also a part of this type of death.
Suicide is another type that is not covered by the Term Life Insurance Policy at least for the first year. So, in case the policyholder commits suicide within the first year, the nominee will not get the wealth benefit. It is only from the second year of holding the policy that the nominee might get the death covered. However, this will only occur if the terms and conditions of the Term Life Insurance Policy permit so.
For any individual who applies for the Term Insurance Policy, they must disclose their smoking habits before the application is delivered. In case the death of the policyholder occurs due to the undisclosed habit of smoking, it will be deemed as an unethical action and thus, the death will not be covered. If you disclose the habit of smoking before your application is delivered to the policy team, an additional amount will be charged to acquire the death benefit.
We are all aware of the detriments that alcohol consumption can cause for us. Not only can it affect our mental health completely but also shatter our lives if we drive under the influence of it. The death of a policyholder in this case too can be deemed as uncovered to respect the policy of the Life Insurance team. Whether one dies due to the intake of narcotic substances or drinking plenty of alcohol, their death will be left uncovered by all means.
Another case in which Term Life Insurance Policy does not cover deaths is when the policyholder dies due to pre-existing health illness. Self-injuries, sexually transmitted diseases and even the consumption of drugs are some of the other instances where Term Life Insurance Policy does not consider covering the death of the Policyholder.
There are two categories under this type of uncovered death which everyone must be in terms of. The first is when the nominee is a criminal and the second when Policyholder was involved in any crime himself. Since both these categories involve murder, the family of the policyholder will not be covered in case of this type of death occurs.
However, C.S. Sudheer who is the CEO of IndianMoney.com added clarity to this point by saying, "The pay-out would be made only if murder charges are dropped or on an acquittal. The insurer withholds the pay-out indefinitely, till resolution of the case in favour of the nominee."
If the policyholder dies due to any natural disaster, anywhere across the world, their nominee will not receive the death benefit. Earthquakes, Tsunamis, landslides, storms, or any other type of natural disaster is a part of this list with no exceptions.
In case the death of the policyholder occurs due to giving birth to a child or some pregnancy complications, her death will not be covered by the policy. This is why the insurer will not pay any death benefit to the nominee.
These were some of the type of deaths that the Term Life Insurance Policy does not cover. If you have any queries regarding them, make sure to discuss the policy of death claim before you apply for one.
Published : 18 June 2019
Written By : Naval Goel
Last Updated : 09 February 2021
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