Term insurance pay-out could be a very sensitive topic. Discussing an unfortunate demise that could happen might be uncomfortable for many, but clarity is of utmost importance here, especially when a term insurance is a matter of the financial safety of a family.
In a term life insurance, the beneficiary, which is most often a family member, can claim the insured sum in case of an untimely demise of the insured. Here, it is important to understand what types of demises are covered in a term insurance and what are not. A proper understanding of this will help you choose a plan and riders that can suit you the best.
While terms and conditions may vary for different insurance providers, let’s look at what is covered and what is not, in general.
Types of death covered under term insurance
- Natural deaths
Natural death is covered in term life insurance plans which comprises of death due to illness or old age. In this situation, the policy beneficiary can claim coverage with a proper medical certification regarding the cause of death.
For example, if someone passes away in sleep due to a heart ailment, the family member, who is the beneficiary, can claim insurance coverage with a medical certificate from a doctor certifying the cause of death.
- Deaths due to accident
Most deaths due to accidents are covered under term life insurance plans. By accidental death, insurance companies mean an involuntary and sudden event that causes harm that takes a life. Accidents covered could include
- Road accident causing the demise of the insured.
- Passing away at the place of work due to involuntary causes, like a fire-related injury.
- Demise due to drowning.
- Passing away due to a natural calamity, like a lightning strike etc.
A death after a period of time of the accident, due to the injuries sustained in the accident, is also covered under most life term insurance plans.
If you work in a risky environment, you could add riders that will pay additional benefits to the beneficiary, in case of an accidental demise.
These riders could give the beneficiary even double the insured sum, according to your plan’s terms and conditions.
What is not covered under term life insurance?
Now, let’s take a look at deaths that are not generally covered under term life insurances.
- Death due to driving under the influence of alcohol is not covered. Not only driving, but insurance companies can deny a claim in any case of death that is caused by the influence of alcohol in the insured’s body.
- Deaths due to pre-existing conditions that were there before you took the insurance plan might not be covered.
- Deaths due to adventure sports or dangerous hobbies like sky diving or scuba diving might not be covered under your term life insurance.
- Another important exclusion is death due to pregnancy or childbirth. Most insurance policies have a clause that will prevent the beneficiary from claiming insurance in demises related to childbirth.
- Claims on demise due to any illegal activities can also be rejected.
What should you consider before buying a health insurance?
The first and foremost thing you should do is proper research. There is a lot of information available on different insurance provider websites that will help you with your research.
It is advisable for you to consume all the relevant information and compare different plans and riders before you choose.
Riders could be chosen according to your special needs as well. For example, if you work in a risky environment, adding a rider that will pay the beneficiary a bonus amount in case of accidental deaths could be a wise idea.
Term insurance calculators could also be very helpful. They help you find out your term insurance premium, according to your needs.
If you’re still doubtful, most insurance provider websites will help you with an expert advisory that could help you choose.
If you still don’t have a term insurance, don’t wait till it’s too late! Go to an insurer’s website, use their term insurance calculator to know your premium and get insured today!