Does term insurance cover all types of death? No, not at all. There are some specific types of deaths that a term insurance doesn’t cover.
Have any idea what kind of deaths are not covered in term insurance? No? Well, be relaxed. You know not only you, many don’t know about it.
That’s why we’ve come with this article. In this article, we have discussed several deaths for which you won’t be eligible in term insurance.
The death that is not covered in term insurance:
You must know that purchasing any term insurance strategy is not sufficient. There are various term insurance strategies in any market.
So, you need to keep knowledge about the challenges that you may face. So you need to know what kind of deaths are not covered in term insurance.
Once you are aware of the death that is not covered in term insurance, then you can find ways to manage them in advance.
Moreover, the claim rejection risk because of this type of death can be minimized as well.
Well, now I will discuss the deaths that are not covered in term insurance.
- Death of policyholder due to murder:
There are two cases if the policyholder dies due to murder:
1. If the beneficiary is the criminal:
If there is any evidence that the policyholder is murdered and the nominee is somehow connected with the murder case, then all the claims of the nominee will be rejected.
2. If the policyholder is criminal and dies because of his crimes:
If an insurer or a policyholder is involved in the criminal activities and his death is related to his criminal activities, then all the claims from his nominee will be rejected by the insurance company.
On the other hand, if the policyholder is a criminal but dies because of natural uncertainty or disease such as dengue, swine flu; then the insurance company will give the claims to the nominee.
- Death because of natural calamities:
If any policyholder dies because of natural calamities such as floods, earthquakes, hurricanes, etc. then those deaths will not be considered to take a claim.
So you have to stay alert of the same as well as keep the receiver updated. If the nominee or the applicant plans so that he can claim in that scenario, then for sure it will be rejected.
- Death because of terrorist attack:
When a policyholder or an insured dies because of the terrorist attack, then those types of deaths won’t be able to be claimed by the nominee or the receiver.
Though as a policyholder you can’t guarantee to precaution again this kind of death they may stay alert all the time.
In the course of national holidays, it is better for you to keep away from public places where there remain the chances of the terrorist attack.
- Death because of the accident:
Normally, any kind of death because of the accidents isn’t concealed in the strategies of the term.
If a person wants to conceal such kind of death, then he must contain a particular rider on behalf of the same.
Without taking a separate accident rider, it is not possible for the person to cover that threat of life because of an accident.
- Death due to HIV or AIDS:
If the policyholder dies because of any kind of disease like sexual transmissions such as AIDS or HIV, then the company of insurance will not agree to take the claim.
- Death due to intoxication:
If the death of the insurer or the policyholder occurs because of the overdose of alcohol or drugs, then the nominee will not be able to take any benefit from the insurance company.
- Death because of self-inflicted injuries:
If the insurer or the policyholder dies because of hazardous activities or self-inflicted injuries, then the insurance company will reject all the claims made by the nominee.
- The death occurred outside of the country:
If the insurer or the policyholder goes outside of the country to travel and unfortunately dies there, then that kind of death cannot be covered in that term of insurance.
If your health is not well, then you have to avoid international visits. However, as some particular treatments can be done only at some specialized hospitals outside the country, in those situations international visits are unavoidable.
The policyholder must have the idea that if they die in a foreign country, then their beneficiary would be divested from any claims.
When you are alert of this kind of death in advance then your family will also be prepared.
But if you don’t inform your family members, then the rejection of the claim will shatter them.
So as a policyholder, you need to follow all the terms and conditions of the policy as well as keep your family members conscious of it.
- Death because of critical illness with no rider:
To recover the critical illness which can lead you to death, it is important for you to take a particular rider.
Without taking necessary steps in case of likely to occur or pre-existing critical illness, you will be at a huge risk.
- Death because of suicide:
If suicide is committed by the policyholder or the insurer, in between the 1st year of the term of the policy, then the nominee won’t be able to get the benefit of the death.
Although, most of the insurers deliver the coverage of suicide from the 2nd year straight on from the date the policy is being purchased according to the terms and conditions.
Through the article, I have discussed an important issue of the insurance policy.
I discussed the deaths that are not covered in term insurance on which you might have confusion.
I hope now you have a clear idea about this topic. So, keep learning to avoid any kind of risk in the insurance policy.
John has been writing on financial topics from the beginning of his career in finance. He spent nearly five years as an emerging markets analyst in The USA and has written on a wide range of finance related topics.
- Investment professional with 8-year track record of delivering high-impact financial communications solutions
- Skill set includes financial writing, equity research, institutional marketing, and content strategy
- Experienced in developing custom content and thought leadership pieces to support business objectives while promoting brand awareness
- John earned his bachelor in science degree and master’s in business administration. He holds a CFA charter.