Types of Death Covered and Not Covered By Term Insurance

Why do you buy a term insurance plan?

In most cases, the answer to this question is to have a life cover that will provide financial protection to your dependents in the event of your untimely death. As long as all premiums are paid, term plans provide a death benefit during the policy tenure. The payout can help maintain your dependent’s standard of living. It can let them cover essential expenses, such as daily living costs, children's education, home loan EMIs, and other financial obligations.

But not all deaths qualify for a term insurance benefit. There are conditions and exceptions in the fine print for types of deaths covered. Certain claims may be rejected if those conditions aren’t met.

Hence, it’s important to understand these conditions before choosing a term insurance plan. Your policy document clearly lists the types of death covered under the plan.

Types of deaths covered

Knowing the types of death covered is crucial before choosing a term insurance policy. It will let you make an informed choice and avoid surprises later. Let’s explore the types of deaths covered by term plans.

1. Natural deaths

   If the insured dies due to old age, some medical condition etc. it is considered to be a natural death. Such deaths are covered under the plan, and the sum assured is paid to the nominee.

   
   

2. Accidental deaths

   Accidental deaths are unpredictable. Such deaths are covered under term plans from the first day of coverage.

   
   

3. Deaths due to natural disasters

   Coverage would be available if the insured dies due to natural calamities like earthquakes, floods, tsunamis, hurricanes, etc. The sum assured amount would be paid to the nominee, as death benefit by the Insurance Company.

   
   

4. Deaths due to an illness

   The term insurance policy will come to your family's rescue if death occurs due to health-related issues or a critical illness. It would cover such deaths and pay the death benefit subject to policy terms & conditions.

   
   

5. Suicides

   In the case of suicides, there is a specific conditions under term insurance plans. Coverage would be available if the insured dies from suicide after 12 months of buying a new policy or reviving a lapsed one. The death benefit would be paid in case of such suicides. However, this varies from plan to plan and also among the various life insurance companies as certain companies may or may not provide coverage for suicidal death.

   For death due to suicide within 12 months of buying or reinstatement of a life insurance plan, death benefit is not provided to the nominee in most of the cases.

   Moreover, it is always important to read policy terms & conditions and know the inclusions & exclusions of the policy before purchasing it.

   
   

Types of deaths not covered

While the aforementioned types of deaths are covered under term plans, some of the below mentioned ones are excluded –

1. Suicides within a year

   As mentioned earlier, suicides have a specific condition under term insurance plans. If the insured commits suicide within 12 months of buying the policy, such a death would not be covered. In this case, the premium paid would be refunded back after applicable deductions, and the policy would be terminated.

   Similarly, the death benefit would not be paid if the insured has revived a lapsed term plan and then commits suicide within 12 months of such revival.

   
   

2. Death when you are under the influence of intoxicants

   If the insured is under the influence of alcohol, drugs, or any other intoxicating substance and then death occurs due to such an influence, the death would not be covered under the policy. Similarly, coverage would not be allowed if the insured is addicted to intoxicating substances and dies of the medical complications of such an addiction.

   
   

3. Death due to HIV/AIDS

   Coverage for HIV/AIDS under term insurance plans may vary across insurers. Traditionally, death due to HIV/AIDS has been excluded from coverage in many term plans. However, with evolving underwriting practices, some insurers now may offer term insurance to individuals affected by HIV/AIDS, subject to specific terms and conditions. It is important to review the policy document and consult with the insurer to understand the scope of coverage before purchasing.

   
   

4. Death due to an illness that you hid from the insurer

   Term plans require you to disclose your medical health and past history truthfully. If you hide this material information, it is considered a breach of good faith. If the health or medical illness gets complicated and the insured dies due to the same, such a death would not be covered.

   
   

5. Homicides

   Though homicides are covered, there are instances when such deaths would be excluded. If the insurer finds out that the nominee or the beneficiary was involved in the murder or if the murder was done to acquire the insurance payout, the insurance company will reject the claim. In such cases, the death benefit would not be paid.

   So, before you purchase your term insurance plan, know which deaths would be covered and which won’t by ensuring you have read the policy terms & conditions properly. This would help you avoid claim rejections and get the term insurance benefits when it is most required.

   
   

6. Participation in illegal activities

   Term insurance policies usually do not cover death caused by the life assured's participation in illegal acts. Theft, assault and other criminal activity are some examples of unlawful activities.

   
   

7. Participation in adventure sports/activities

   Most standard term insurance policies exclude coverage for deaths caused by adventure sports or hazardous activity. These include bungee jumping, skydiving, scuba diving, mountain climbing or other extreme sports where the risk of serious injury or death is more imminent compared to daily life.

   The insurer may reject the claim if the life assured dies while participating in such activities, and the nominee may not receive the benefit. Some insurers may offer riders or additional coverage for adventure sports. They must be purchased separately.¹

   
   

8. Death due to childbirth

   Childbirth-related deaths are not universally excluded under term insurance policies. Coverage depends on:

   • Disclosure of pre-existing conditions
   • Specific policy terms and exclusions

   Some insurers may exclude such deaths, especially if linked to undisclosed health risks. So, go through the policy terms. It is also paramount to disclose any health conditions when buying the policy.