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Types of Death Not Covered by Term Insurance

August 15, 2022

Traditional term insurance plans promise a future sum to your nominee in case something happens to you while the policy is still active. These plans offer life coverage for a limited period, and once the policy matures, the policyholder loses their coverage. Traditional term policies did not provide any maturity benefit or additional payout on survival, but they offered incredibly affordable premiums.

Today, these policies have evolved. While they remain affordable, they now come with a few maturity benefits. Policyholders can opt to receive a return of the premium amounts paid if they survive the policy term. Policyholders can choose whole life insurance plans instead of limited, 10- or 15-year policies. Today, every prudent financial plan includes a term policy since it is light on the pocket and offers high life coverage. However, there are terms and conditions on the situations these plans cover.

Here’s a look at the various types of death your term plan will not cover:

  • Criminal Activity
    Insurance companies will not provide the sum assured in cases where the beneficiary murders the policyholder. Additionally, they could reject claims if they discover the policyholder was involved in illegal activities leading to the death or if they died due to a terrorist attack.

  • Critical or Terminal Illnesses
    Term policies do not cover terminal illnesses. However, they do offer critical illness cover as an additional rider. If the policyholder purchases the rider, they will receive a payout on the diagnosis of a covered illness. Without the rider, the term insurance will not provide coverage for diagnosis.
  • Pre-Existing Health Conditions not Declared
    Individuals must declare all health conditions while purchasing term plans. The term policy will not cover deaths caused by pre-existing illnesses or related conditions which were not declared while buying the policy.
  • Self-Harm or Suicide
    There are different rules regarding death by suicide for policies purchased before and after 2014. Policies purchased before 1st January 2014 will not provide the death claim settlement for suicidal deaths within the first policy year. For policies purchased after 1st January 2014, insurance companies offer some payout for suicidal deaths in the first year, up to 80% of the total premium amounts paid.
  • Term plans enable you to provide your loved ones with financial security and stability when they need it most. HDFC Life offers various term insurance policies to help create a secure financial base for your family. Visit https://www.hdfclife.com/term-insurance-plans to find details of our term insurance policies.

Frequently Asked Questions

Q: Which type of death is covered in a term plan?
A: Term plans cover all health-related and natural deaths. If a medical condition or critical illness claims the life of the policyholder, the beneficiary receives the sum assured as per the policy terms. Additionally, term plans cover accidental deaths, including fatalities caused by vehicular accidents, drowning etc.

Q: Does term insurance cover normal death?
A: Yes, term plans cover all normal deaths, including illness-related deaths, and natural deaths.

Q: What is accidental death in term insurance?
A: Accidental death refers to any unforeseen and uncontrolled external force those results in death. Term insurance plans cover accidental deaths and enhance pay-outs with accidental death riders.

Q: Does accidental death insurance cover natural death?
A: No, death from a natural cause or illness does not fall under the purview of accidental death.

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