Term Insurance Terms & Conditions - Explained

Generic Terms & Conditions of a Term Insurance Policy
Endnotes

When you purchase a term insurance policy, you can rest assured that your loved ones will be financially secure and that their life goals will not be impacted even if the family faces an unfortunate event. So, if you have planned properly, you can get adequate coverage at affordable premium prices. Moreover, the success of a plan depends on the insurer and the type of policy plan. Although different insurance providers have their own set of terms and conditions, some conditions are followed by every insurer and are applicable on every plan. Let's dive into the article to learn about such generic terms and conditions.

Generic Terms & Conditions of a Term Insurance Policy

Here is the list of terms and conditions which every term insurance policy contains.

1. Healthy Lifestyle

The death of a person as a result of their lifestyle choices can be excluded from the coverage. For instance, insurance firms always check to see if the life assured is a smoker. Smoking is a lifestyle choice that can shorten the life of the life assured. This is why a smoker is generally identified as a high-risk policyholder and offered policies at higher premiums. So, if the life assured does not disclose a smoking habit while purchasing a policy, the insurer may deny the claim if the death is caused by smoking.

2. Accidental Death

Although a term plan covers accidental death, it does not guarantee that a claim filed in such a case will be accepted. When someone dies in an accident, the insurance companies always look into the circumstances. The technique for conducting such an inquiry may differ from one insurer to the next, but the results must be satisfactory for the claim to be accepted.

3. Pre-Existing Condition

You must disclose all health conditions that you have or are anticipated to have due to pre-existing conditions or even hereditary conditions during policy inception. These criteria will always be considered when drafting your term insurance policy, and this will impact the amount of your term insurance premium. However, you will not be covered if you have a pre-existing medical condition that was not disclosed to the insurer before purchasing the insurance. Moreover, the policies have a 'waiting period'. This means that if people with pre-existing conditions die after certain months or years mentioned in their policy, only then the insurer will be liable to pay the death benefits.

4. Suicide Or Self-Harm

Any death caused by self-harm or suicide is always excluded from term insurance terms and conditions. On the other hand, some insurance companies might refund the payment if the life assured commits suicide within a year of purchasing the coverage. In that situation, the insurer deducts certain charges. Furthermore, death due to engagement in dangerous activities for self-harm is not covered by the policy.

5. Drug-Overdose or Intoxication

In India, most life insurance firms refuse to provide term insurance coverage to alcoholics and drug addicts. This claim cannot be hidden from the insurer. Even if you conceal your drinking problem and drug addiction and purchase a term insurance policy, and you die in an accident or other occurrence while under the influence of drugs or alcohol, the life insurance claim can be denied.

Endnotes

The terms and conditions of term insurance may vary from one insurer to the next. So, before you buy a term insurance plan, make sure you read the policy document carefully to understand the mentioned exclusions. Moreover, make sure you don't live a lifestyle that puts you at risk of death and could result in your nominees' insurance claim being denied by the insurer.