Common Terms and Conditions on Term Insurance Plans

Common Terms and Conditions on Term Insurance Plans

No matter when you decide to start saving for your family’s future, make sure that you invest in a life insurance policy that serves the purpose. A term insurance plan is one such life insurance product that is affordable and allows you to secure the financial future of your family with ease. But all this disciplinary investment and hard work will go to waste if your family is unable to make a successful claim on the policy after your death.

Therefore, it is best to keep yourself and your beneficiaries well versed with the claim settlement process and the terms and conditions of your term insurance plan. Having a complete understanding of what the policy coverage is and what are its exclusions will encourage the nominees to benefit from the death claim.

Here, we have shed light on some of the generic term insurance exclusions that you and your nominees must know. 

Exclusions in an Accidental Death

Accidental deaths are covered under the term insurance plan. However, there are a few exceptions to it that might lead to claim rejection. In the case of accidental death of the insured, the insurer will investigate the matter before settling the claim. 

Insurers usually have a dedicated team of healthcare professionals to guide them in this process. The term insurance claim approval or rejection is dependent on the investigation report.

Exclusions due to Lifestyle

When buying any life insurance product, applicants need to mention their lifestyle habits to the insurer. These include smoking and drinking alcohol. The insurer needs to know your lifestyle as this piece of information comes in handy if you die due to these issues. 

In simple words, smokers are categories as high-risk applicants as compared to non-smokers. This tends to influence the premiums charged on the chosen term insurance plan. Based on this, the insurer has the liberty to deny death claims on the policy if the insured dies of smoking and has not mentioned this lifestyle habit in the application.

Other Exclusions in Term Insurance Plans

Apart from the ones mentioned above, term insurance plans have a few other exclusions as well. These are explained below -

1. Suicide or Self-Inflicted Injury

In case the insured dies by suicide or self-inflicting injuries, the insurer might reject the death claims made by the beneficiaries. Moreover, certain insurers do not have death by suicide enlisted in their exclusions. If the insured dies by suicide within the first year of the term plan, then the insurer will repay the premiums paid towards the policy. 

However, no other compensation is paid to the beneficiaries. It is best to get in touch with the insurer to understand whether or not the policy covers death by suicide and what are the rules when making claims regarding the same.

2. Consumption of Narcotics or Intoxication

If the insured dies due to consumption of drugs or alcohol, the insurer has the liberty to reject the death claims made by the beneficiaries of the term insurance plan.

3. Sexually Transmitted Illness

Most term insurance plans do not cover death due to sexually transmitted diseases such as HIV/AIDS. So, if your insurer does not cover STDs, then any claims made for the same will be rejected in the future.

4. Pre-Existing Medical Condition

Typically, term insurance plans have a waiting period for different critical health conditions before the coverage begins. This waiting period is between three months to four years for most term plans in India. So, if the insured dies due to a pre-existing medical condition during the waiting period, then the claims made for the same might be rejected by the insurer.

5. Death due to involvement in criminal activities or riots

Term insurance plans do not cover the death of the insured when he/she is a prime suspect in illegal activities or riots. The ideal purpose of term insurance is to cover unexpected and accidental deaths. Hence, any kind of involvement in criminal acts or riots will lead to claim rejections in the future.

To Wrap it up

Term insurance is the most affordable life insurance product available in the market. It is an ideal way to secure your family’s financial future in the event of your death. 

However, not having a complete understanding of policy terms and conditions will lead to claim rejections in the future. Make sure that you understand the term insurance benefits, coverage, and exclusions before buying the policy. It will only help you make an informed decision for yours and your family’s future. 

Also, it is wise to keep your dependents well versed with the claim process as you won’t be around to help them when the time comes.