8 Major Death Cases Which Are Not Covered in Term Life Insurance
A term life insurance plan is beneficial to replace income loss in case of an untoward incident. It is a commonly known fact that term plans pay a lump sum to the nominees of the policyholder passes away. However, most people do not have complete knowledge about what is term insurance and the kinds of deaths covered in such a plan. Here are eight such instances:
Term plans will not pay the benefits if the nominee is involved in the murder of the policyholder. The insurer does not pay the money until the nominee is acquitted or the charges are dropped.
Additionally, if the policyholder is murdered because of a criminal involvement, the nominee does not receive any benefits from the term life insurance plan. However, if the policyholder has a criminal record but passes away due to natural causes, the nominee is eligible to receive the benefits.
- Under influence
In case of accidental death due to intoxication or substance abuse, the insurer will deny the claim. Most insurers do not issue term life insurance plans to drinkers; however if an individual does qualify for insurance, it is recommended that he provides an accurate history of his habits while submitting the proposal.
- Withholding smoking history
If at the time of buying the policy, the individual does not provide information about his smoking habit, the insurer may reject the claim in the future for death arising due to this habit. Therefore, it is crucial to know what is not covered in term insurance before purchasing the policy.
- Participation in hazardous activity
Hazardous or adventure activities such as skydiving, hiking, bike racing, and paragliding, among others are a threat to life. If a policyholder dies due to a fatal accident while participating in such activities, the insurer will not pay the policy benefits to the nominee.
- Pre-existing illness
Death due to a pre-existing illness at the time of purchasing the plan is not covered under a term plan. Individuals must know what is not covered in term insurance because death due to AIDS, HIV, or drug overdose will not be eligible for the policy benefits.
If the policyholder passes away due to complications related to pregnancy or during childbirth, the nominee will not receive the benefits.
Suicidal death during the first year is not covered under the term insurance plan. However, some insurers cover suicide from the second year since the date of purchasing the policy.
- Natural disasters
Insurance companies do not pay the death benefits if the policyholder dies due to natural disasters, such as earthquake, tsunami, floods, or hurricanes.
Before buying insurance, it is critical to not only know what is term insurance but to also have a clear idea about the exclusions to help make an informed decision.