What is Not Included Under A Term Plan?
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Term insurance offers comprehensive financial coverage against premiums paid to the beneficiary of the policy. This coverage is paid as ‘death benefit’ upon the demise of the insured during the policy term. However, there are certain death scenarios which are not covered under a term plan. These are known as exclusions of a term plan. In case the policy holder’s death happens under certain circumstances, the nominee/beneficiary does not get the claim amount. These exclusions may vary from company to company.
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What is Not Included Under A Term Plan?
Exclusions are conditions which are not generally covered by the insurance company. Here are some of the exclusions in term insurance plans that one must know when taking a term insurance plan
1. Exclusions due to Accidental Death
Although accidental death is covered in a term insurance policy, there may be few exceptions wherein the insurance company will not provide coverage. If the death of the policyholder is caused by consumption of alcohol or drugs while driving, the insurance company is not legally responsible to compensate the beneficiary. Term insurance plans also do not cover deaths from policyholder’s involvement in criminal or illegal activities. A term insurance plan is only for unforeseen or genuine accidental cases. Thus, the involvement of the policyholder in the above activities proves the policyholder’s deliberate intention to be exposed to bigger risks.
2. Death by Suicide
The claim would not be accepted if the death of the insured is due to self-inflicted injury or participation in life-threatening adventure/sports without taking the necessary precautions. Moreover, suicide is on the list of exclusions of all term insurance plans. If the policyholder dies by suicide within a year after purchasing the term insurance plan, his/her family will not receive any compensation.
3. Death Due To Sexually Transmitted Diseases
If the policy holder’s death is caused by Sexually Transmitted Diseases (STDs) such as HIV, AIDS, etc., it is not covered under the term insurance plan and any claim made against this will be rejected by the insurance company
4. Death Due to Bad Lifestyle Habits
Almost every insurance company checks the insured's smoking habits in advance. This information is of importance, especially when the policyholder dies because of a lifestyle issue. In other words, smokers have a lower rate of mortality than non-smokers, and that is why smokers are typically labeled as a high-risk category, which affects their premium rates adversely. Insurance providers have the right to refuse the claim if the policyholder dies because of smoking and fails to disclose it at the time the proposal was submitted.
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Bottom Line
A term insurance plan helps to give your loved ones a guaranteed amount that will take care of their future. Hence, paying attention to the terms and conditions of the insurance contract is very important to avoid any denial of a claim later. Thus, it is very important that you fully understand the features and benefits of a term insurance contract. Although it is very tedious to go through each of the above exclusions, the initial efforts put in would undeniably benefit your family members at the time of claim submission.
