Types Of Death Covered In Term Insurance

Types of Death Covered and Not Covered in a Term Insurance

Before buying a term insurance policy, the policyholder must go through all the inclusions and exclusions to better understand policy offerings. 

Written by : Daina Mathew

Reviewed by : Gaurav Nagpal

Gaurav Nagpal

2023-02-21

1662 Views

16 minutes read

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Securing loved one's financial future is paramount, and purchasing a term insurance plan stands out as a reliable method to achieve this. Its a natural death insurance plan that offer affordable premiums and ensure that in the event of the policyholder's death, the nominated beneficiary receives death benefits.

Different types of death are covered under a term insurance policy. In addition to that, there are a few types of death that don't fall under the plan. In a term insurance policy, nominees get a death benefit when the policyholder passes away. The payout of that benefit depends on the type of death the policyholder had.

If the questions like does term insurance cover accidental death or the natural death insurance policy, then you have arrived at the right page. In this blog, we have covered the list of deaths that are covered and not covered under a term plan. 

Table Of Content:

List of Deaths Covered Under Term Insurance 

The death insurance policy covers numerous instances that are listed below:

  1. Natural Death: Generally, term insurance plans cover natural deaths that happen due to any disease or medical condition of the policyholder. For example, the policyholder passes during their sleep due to a heart attack. In this case, the sum assured will be paid to the nominees or beneficiaries as the plan covers natural death insurance or death due to such medical condition.

  2. Accidental Deaths: The death cover insurance considers deaths caused due to accidents are covered by term insurance policies. However, if the accident happens due to intoxication or under the influence of drugs, then the life insurer will reject the claim made by the nominees. If the policyholder passes away in an accident due to any criminal or unlawful activity, the insurer is not liable to pay the claim.

Mentioned below are some of the probable causes of the claim being rejected in case of an accident death: 

  1. Driving under the influence of alcohol or any other kind of narcotic drugs
  2. Engaged in adventure sports activities. It may include rally racing, skiing, mountaineering, skydiving, and similar activities
  3. Flying in an unlicensed or non-passenger aircraft
  4. Taking part in a strike, rioting or arson
  5. Part of a criminal or illegal activity
  6. Exposed to nuclear, biological, or chemical radiation

Did You Know?

Some term life insurance policies offer riders that go beyond basic coverage. For instance, a critical illness rider can provide extra financial protection

Claim Settlement Ratio

List of Deaths Not Covered Under Term Insurance 
 

  1. Suicide: Nominees receive the natural death insurance plan payout if the policyholder commits and passes away suicide within a year of buying the policy. Regulatory rules for linked and non-linked policies may vary. The rules for payout in case of suicide vary for policies bought before and after 2014.

  2. Undisclosed Health Conditions: Individuals must declare their health conditions while buying the policy as it may later lead to rejection of the claim if any such information is hidden. Any pre-existing health condition must be declared to the insurer while buying life insurance.

  3. Natural Disaster: Insurance companies provide coverage if the policyholder would have chosen an optional rider for covering death due to natural disasters. For example, if a policyholder passes away in a Tsunami, flood, cyclone, or any other natural calamity, the beneficiaries can claim the benefits.

Apart from the above-listed conditions, there are a few other situations where the benefits of natural death insurance plan is not paid out to the nominees:

  1. Homicide: If the policyholder dies due to a murder committed by the nominee(s).
  2. HIV/AIDS: If the death of the policyholder takes place due to sexually transmitted diseases.
  3. Intoxication: If the policyholder dies due to consumption of alcohol or any other narcotic drugs.

Final Thoughts 

Now that you know the answer to common concerns like does term insurance cover natural death, it is essential for you to review the policy documents thoroughly. iSelect Smart360 Term Plan provides comprehensive coverage with whole life cover, return of premium, block premium option, critical and terminal illness coverage, and a range of other benefits. With this term plan, the policyholder can get back all the premiums they have paid throughout the term if they outlive the policy term.

Glossary:

  • Nominated Beneficiary: The individual or entity the policyholder chooses to receive the financial benefit upon the insured's passing.

  • Terminal Illness Coverage: This refers to the provision in insurance policies that allows policyholders diagnosed with a terminal illness to receive a certain percentage of the death benefit early to cover medical expenses or other needs. 

  • Return of Premium: A feature in some term insurance policies where the insurer refunds the premiums paid in case the policyholder survives the term period without making any claim.

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FAQs on Term Insurance coverage

Various insurance policies like term life insurance and whole life insurance cover natural deaths due to illnesses or medical conditions. These policies provide financial protection to beneficiaries in case of the insured's natural passing. It helps to offer the insured’s family peace of mind during challenging times.

An example of a natural death in insurance is when the insured passes away due to health-related issues like cancer, heart disease, stroke, or other medical conditions that are not caused by accidents or external factors. These events are typically covered under life insurance policies, providing financial support to the beneficiary designated by the insured.

Yes, term life insurance typically pays out for natural deaths caused by illnesses or health-related issues covered under the policy's terms, offering financial protection to beneficiaries in such circumstances.

Term insurance typically covers deaths due to natural causes like illnesses (e.g., cancer, heart disease) and accidents (e.g., car crashes, falls). Understanding these coverage details helps policyholders choose the right plan to protect their loved ones financially.