Common Exclusions Under Term Insurance

Common Exclusions Under Term Insurance

Term plans play a significant role in protecting the future of your loved ones. One of the most popular life insurance policy types available in today’s time, term insurance is a worthwhile purchase if done in the right manner at the right time.

It must be noted that under term insurance, the policyholder is required to appoint a nominee who can avail the claim benefits in case of the demise of the former. However, what most policyholders and nominees stay unaware of is that insurance companies work based on certain insurance terms and conditions at the time of approving a term insurance claim. An insurance company can simply reject the claim if it falls under the range of exclusions. Exclusions too can vary for insurance companies, but there are certain exclusions that most companies follow.

Common Exclusions Under Term Insurance

The list of common exclusions under term insurance includes:

Accidental Death Exclusions

Accidental death is included in term insurance, however there are chances that in some cases, the claim might not get accepted. In cases of accidental deaths, the insurance companies always perform investigations of circumstances of the incident. The investigation process may vary from insurer to insurer, but the results must be satisfactory for the claim to gain acceptance.

Death Due to Suicide & Self-harm

In term insurance terms and conditions, death as a result of self-harm or suicide is always excluded. However, it must be noted that some insurance companies willingly return the policy premium if the policyholder commits suicide within a year from buying the policy. In a case like such, certain fees are deducted. One must also note that death by participating in dangerous activities is also excluded under most term insurance policies.

Conditions Regarding Lifestyle

You may find death caused due to lifestyle choices under exclusions of term insurance policies. It must be noted that insurance companies always seek confirmation for the smoking habit of the policyholder. It is because if the policyholder is habitual of smoking and it being their lifestyle choice, then the habit can easily shorten their life. Therefore, insurance companies consider smokers to be high-risk policyholders. If an insured person does not declare their smoking habit while purchasing the term insurance policy, their claim might get rejected in cases where the death is related to smoking.

Death Due to Participation in Criminal Activities

Term insurance policies are specifically designed to provide financial support to family members of the policyholder in case of an unexpected death. In case, the insured individual engages in activity involving higher risk to life, then insurance companies are entitled to reject the insurance claim. It should be noted that death from participating in riots or any other criminal activity is excluded from the policy.

Death Due to Intoxication

Death due to intoxication is one of the most common conditions that insurance companies avoid covering. In case the death of the policyholder takes place due to the habit of drugs or an excessive amount of alcohol, the insurance company is not held responsible to pay the cover.

Pre-existing Medical Conditions

Insurance companies provide the clause of the waiting period in the case of pre-existing medical conditions. In case, the insured individual suffers from a pre-existing illness, they have to wait for a certain period as prescribed by the insurance company insurer before they get covered for their health condition. In case of critical illnesses, the waiting period ranges between a few months and a few years.

Now that you are aware of exclusions under term insurance policies, make sure you keep them in mind before filing for a claim.