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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:

  1. Homicide

    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.
  2. Man-made Calamities

    Deaths caused by man-made calamities like war, rebellion, riots, strikes or military usurpation will not get covered by term insurance plans. Your policy documents will detail the situations that are not covered.
  3. Intoxication

    If the policyholder dies while under the influence of alcohol or drugs, the nominee will not receive the policy benefit.
  4. Hazardous Activities

    During adventure activities like bungee jumping or paragliding, things may go awry. If the policyholder undertakes such hazardous activities, the term plan will not cover these fatalities.
  5. 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.
  6. Pre-Existing Health Conditions

    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.
  7. Natural Calamities

    Term insurance plans do not provide coverage for natural calamities. If the policyholder dies during floods, earthquakes or other extreme weather, the term policy will not cover it.
  8. 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.

ARN -  ED/08/22/28322

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HDFC Life Insurance Company Limited (“HDFC Life”). CIN: L65110MH2000PLC128245, IRDAI Reg. No. 101.

Registered Office: LodhaExcelus, 13th Floor, Apollo Mills Compound, N.M. Joshi Marg, Mahalaxmi, Mumbai 400 011. Tel No: (022)67516666. Email: [email protected], Tel. No: 18602679999 (Mon-Sat 10 am to 7 pm) Local charges apply. Do NOT prefix any country code. e.g. +91 or 00. Website: www.hdfclife.com

The name/letters "HDFC" in the name/logo of the company belongs to Housing Development Finance Corporation Limited ("HDFC Limited") and is used by HDFC Life under an agreement entered into with HDFC Limited.

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