Which Deaths Are Not Covered Under Term Insurance Policy?
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When deciding to buy a term insurance plan, one must be vigilant, since several clauses can make you ineligible for the sum assured. There are certain scenarios in which a death claim is not eligible. Thus it is important to know such scenarios to reduce the likelihood of denial of claims due to such deaths.
Deaths Not Covered Under Term Insurance Policy
Below are some of the kind of deaths that are not covered in term insurance reasons for denying claims in the event of the death of the policyholder
1. Death Due to Terminal Illness
Some illnesses can lead to the definite death of the insured. Fourth-stage tumours/cancers, HIV, some forms of diabetes, certain rare fatal diseases, and many more are some of these illnesses. If a policyholder dies because of that form of illness, then term insurance will not cover it.
2. Suicidal Death
If the insured commits suicide within the 1st year of the policy tenure, then the nominee/beneficiary does not receive the sum assured. However, some insurance companies provide suicide coverage from the 2nd year onwards from the purchasing date of the term plan.
3. Death Due to Natural Calamities
If the insured dies due to natural disasters such as hurricanes, earthquakes, flooding, etc., such deaths are considered at the time of claim. The insured should be aware of the same and keep the nominee/beneficiary informed as well. If the nominee/beneficiary plans to claim in such a situation, it would be denied.
4. Death Due to Childbirth
The insurer will deny claim to the nominee/beneficiary if the death of the policyholder/insured is due to childbirth/maternity problems.
5. Death Due to Alcohol Intake/Smoking
When the death of the insured is because of driving under the influence of alcohol/drugs, the claim would be denied by the insured. For people who drink excessively or use narcotic drugs, the insurer can deny the death payout if the insured has not disclosed these habits when purchasing the term insurance plan. If the death was because of smoking-related complications, failure to report the habit of smoking when buying the term insurance plan can lead to denial of the claim.
6. Death from Hazardous Activities/Adventure
Death is not covered by term insurance because of partaking in an adventure or dangerous activity. These activities are risky posing threat to the insured’s life and can lead to catastrophic injuries. If the insured partake in outdoor sports such as car/bike racing, paragliding, skydiving, rock/mountain climbing, and parachuting, he/she must disclose this when purchasing the term plan. Failure to do so can lead to denial of the claim.
7. Death Outside the Country
When the insured travel out of the country and dies there, the term insurance does not cover such deaths. The insured should know that if he/she risk their life in an overseas location, all claims will be deprived to the nominee/beneficiary.
Bottom Line
One of the most important reasons for purchasing a term insurance policy is to cover life-related financial risk. However, you have to keep yourself updated on the related risks and challenges associated with a term plan. This enables you to understand the reasons/causes of death which the insurer will not compensate for.
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