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Types of Death Covered and Not Covered in Term Insurance Explained
A basic term insurance plan offers substantial coverage for only certain types of deaths. Since life is unpredictable, you can include essential riders in your plan for added financial protection. However, prior to that, you must know if accidental death is covered by term insurance.
In addition, you need to be aware of the other types of deaths that insurance providers include and those that don’t. This way, you can choose the required add-ons for optimum coverage.
Table of Contents
What Types of Deaths are Covered in Term Insurance?
1. Death Due to Fire
Fire can spread for several reasons, such as not being careful enough while cooking or handling electrical gadgets. It can cause severe burns and make it very difficult to recover from them. In the majority of cases, the patient is unable to survive. However, the beneficiary can claim a term insurance policy to seek financial support in these cases.2. Death Due to Drowning
There are several attractive water sports activities, such as boating or swimming. Although these are pretty entertaining, they involve drowning risks. So, if any unfortunate incident leads to your death by drowning, your family will face a financial crisis. In such situations, term insurance acts as a safety net, protecting your family from financial crises.3. Death Due to Road Accident
Road accidents are a common cause of untimely death. So, it is generally included under a term plan to provide financial protection to your family on your demise. However, it is essential that the accident does not occur due to rash driving or driving under intoxication.
Otherwise, your nominees’ claim can get rejected, leading to a severe financial scarcity in your family after your demise.
4. Death Due to Accidents in Factories
Workplace accidents can occur at times, leading to severe injuries and even death. The possibility of this is even higher if you work in a factory or operate dangerous machines. So, insurers generally include this under term plans to ensure maximum coverage.
This is essential to secure your family financially so that you can work with a free mind and perform your best.
5. Death Due to Falling from Rooftop
Some insurers also include falling from buildings under term insurance policy coverage. So if you accidentally slip and fall from a rooftop, getting injuries that may lead to your death, your beneficiary can raise a claim. Upon verification, if the insurers find the claim justifiable, they will approve it and disburse the sum assured.6. Death from Electric Shock
Electric gadgets need to be handled with care as they can be quite dangerous. Any negligence while handling them can lead to severe injuries or even instant death. So, this type of death is usually included in a term plan for financial coverage. Therefore, your nominee can raise a claim for this policy to acquire the sum assured amount.7. Death Due to Slipping on Floor
Slipping on wet floors is a common incident that can happen any day. However, some of these incidents can turn out to be fatal. So, insurers generally cover such incidents in their policy to provide financial security to your family after your demise.
However, if these incidents differ from the terms and conditions mentioned in a policy, it can lead to claim rejection. So, it is equally essential to know the claims that insurers generally do not include in a term insurance policy.
What Types of Deaths are Not Covered in Term Insurance?
1. Accident Due to Driving Under Intoxication
A term policy does not cover road accidents under the state of intoxication. If you violate the traffic rules or indulge in driving after alcohol consumption, which causes an accident that leads to your death, your nominee's claim will get rejected.2. Death Due to Driving Under Influence of Drugs
Driving under the influence of drugs is another major crime that can land you in great trouble. Also, if you end up losing your life due to this and if the insurer finds it during verification, they will reject your beneficiary’s claim.3. Death Due to Participation in Dangerous Sports
Adventure sports are highly addictive and top the bucket list of adrenaline junkies. However, if you incur critical injuries leading to death, your nominee will not receive the claim amount of the term insurance.4. Death Due to Preexisting Health Conditions
If you keep a chronic health disease hidden from your insurance provider and die because of the same, the insurer won't approve of a claim on your policy. So, it would be better to disclose all such conditions while filling out the application form to avoid claim rejection.5. Death Due to Pregnancy and Childbirth
At times, there can be certain complications during pregnancy. If this persists, leading to an unfortunate death during childbirth, the insurance company will not cover this under their policy. Thus, if your nominee raises a claim, then the insurer will reject it.6. Death Due to Participation in Illegal Activities
If participating in any illegal activities, such as street fights, bike racing, or criminal acts, leads to death, the insurance provider will not offer coverage on the same. Thus, if the beneficiary raises a claim, insurers can discard it.7. Death by Suicide
Insurance companies do not cover suicide. So, should you ever get such a feeling, you can approach a therapist or visit a wellness centre to calm your mind.8. Death Due to HIV / AIDS
Insurance companies do not approve claims on term policy if you die due to HIV or AIDS. These diseases are often fatal, so you must take maximum precautions.9. Death Due to Man-Made Calamities
Man-made calamities such as civil disorder, chemical threats, war, and so on are generally not present under term policy. So, your nominee cannot get approval if you die due to the same.10. Death Due to Undisclosed Habit
If you are a chain smoker or have any other hidden habits that lead to your death, your nominee will not get a claim approval. Hence, you must eliminate such habits, and if you can't, inform your insurer while applying for a policy.11. Death Due to Terrorist Attack
Terrorist attacks are brutal and can cause death almost instantly. However, most insurance companies do not provide coverage for such deaths under the basic term plan. So, if your beneficiary raises a claim on it on this basis, the insurer can decline it.12. Death Due to Homicide
If the nominee murders the policyholder for any reason, the insurer will not approve their claim of the policy. In case the nominee is a suspect, the insurer will hold back their claim approval.13. Death Due to Natural Calamities
Natural calamities such as floods, earthquakes, and so on can lead to large-scale destruction and death. However, insurance providers do not offer coverage for deaths due to natural disasters and will reject such claims.Rider Options to Enhance Term Insurance Coverage
Some rider options that will enhance the term insurance coverage are listed below:
What is the Claim Process for Term Insurance?
Here is the step-by-step procedure regarding the claim process for term life insurance:
Step 1
Inform the insurer about the policyholder's death either by phone or through an online form.
Step 2
Submit the necessary documents, such as a death certificate, policy document, form issued by the insurer for claims, ID proof of the claimant, medical documents, etc.
Step 3
After this, the insurance company will investigate the claim, cross-check documents, and perform additional investigations as needed.
Step 4
The insurer will approve the claim and process the payout to the nominating beneficiaries after verification.
Step 5
Under the terms of the policy, the claim amount is received by the beneficiaries.
Common Reasons for Term Insurance Claim Rejection
Incorrect Data in the Application Form
The application form should be duly, accurately, and entirely filled in, including age, income, job, education, lifestyle habits like smoking or drinking, previous policies, or any claims about him. A miscalculation or even missing information can be identified as fraud and could lead to loss of policy benefits.Non-Disclosure of Medical History
Share all previous and present medical conditions, surgery, and treatments, as this determines the policy premium. Most online term insurance calculators require lifestyle choices like smoking while calculating the premium. Even health problems in your family, such as cancer or heart disease, should be disclosed to avoid claim rejections.Failing to Complete the Insurance Proposal Form
Most customers allow an agent to fill out their proposal form after they sign it. The agent might not be fully aware of your health and your finances. Take the reins and fill out the term insurance form on your own. This will help you understand the policy better and choose what best suits your family's needs.Not Updating Nominee Information
The claims on the policyholder's death are payable to a nominee or beneficiary. It is, therefore, important to update the nominee's details with the insurer, such as his address and contact number. Please do this to avoid complicating the claim so that your life cover benefit can be denied.Unentitled Nominee
Although rare, the insurance provider might not pay a claim if there is no nominee and they cannot agree on a legal heir to the policy.FAQs about Types of Death Covered in Term Insurance
Does term insurance cover natural deaths?
What are the documents required to raise a term insurance claim?
Is death due to self-inflicted injuries included under a term insurance policy?
Which type of death is covered in term insurance?
What type of death is not covered by life insurance?
Does term life insurance cover death?
What happens to term insurance if a nominee dies?
Is death due to COVID-19 covered?
Are deaths from self-inflicted injuries covered?
Other Important Term Insurance Guides
Other Important Articles Related to Term Insurance
Disclaimer
- This is an informative article provided on 'as is' basis for awareness purpose only and not intended as a professional advice. The content of the article is derived from various open sources across the Internet. Digit Life Insurance is not promoting or recommending any aspect in the article or its correctness. Please verify the information and your requirement before taking any decisions.
- All the figures reflected in the article are for illustrative purposes. The premium for Coverage that one buys depends on various factors including customer requirements, eligibility, age, demography, insurance provider, product, coverage amount, term and other factors
- Tax Benefits, if applicable depend on the Tax Regime opted by the individual and the applicable tax provision. Please consult your Tax consultant before making any decision.
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