Term Insurance Exclusions: In today’s fast-forward life, having insurance plans like term insurance has become crucial. However, it’s not just about the benefits; understanding the reasons that could lead to claim rejection is equally important. This article sheds light on eight scenarios where term insurance claims might face difficulties.
What is Term Insurance?
Term insurance is a type of life insurance policy that provides coverage for a specific duration at a predetermined premium rate. If the insured person passes away during the policy term, the nominated individual receives a lump sum amount, offering financial security to the family. Unlike life insurance, term insurance does not provide maturity returns.
Know Exclusions to Consider Before Buying Term Insurance
1. Accidental Death Coverage
While term plans cover accidental death, it’s crucial to note that deaths occurring under the influence of alcohol or drugs during driving might not be considered valid.
2. Substance Abuse and Policy Denial
If the policyholder succumbs to death due to addiction issues, such as drugs or alcohol, the insurance company might reject the term plan claim.
3. Adventure Sports and Claim Rejection : Term Insurance Exclusions
Engaging in adventurous activities like car or bike racing, skydiving, scuba diving, paragliding, or bungee jumping could lead to claim rejection if a fatal accident occurs during these activities.
4. Homicide Investigation and Claim Hold
If the policyholder is murdered during the policy term, and during the police investigation, the nominee is suspected, the insurance company may temporarily withhold the claim until the nominee is cleared.
5. Withholding Critical Medical Information
If the policyholder hides information about a severe illness during the application process, and subsequently dies due to that undisclosed illness, the insurance company may reject the claim.
6. Natural Disasters
In case of death due to natural disasters like earthquakes, cyclones, or landslides, insurance companies may deny the claim, as these events may not be covered under term plans.
7. Criminal Activities
If the policyholder is involved in criminal activities leading to their death, the claim might be rejected based on the regulations of the Insurance Regulatory and Development Authority of India (IRDA).
8. Maternal Death
For female policyholders, if death occurs during childbirth, the claim may be contested, emphasizing the importance of understanding the specific conditions covered under the term plan.
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