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Terms and Conditions of Term Insurance Plans

Buying term insurance plans provides the insured person, his family, or others who are dependent on him with money at the time of need. It comes in handy, especially when the insured person is the sole breadwinner of the household. When a person who purchases the term insurance policy dies, his family or those dependent on him, such as his parents or children, can claim the sum of money that has been assured by the insurance company.

All term insurance plans come with a set of terms and conditions that you must strictly adhere to so that you can request for a claim. There are specific exclusions that apply to some term insurance plans. But these exclusions may be limited only to a handful of term insurance policies.

Accidental Death Benefit Exclusions

Most policies provide accidental death benefits by default. However, some insurance companies may deny claim requests stating various reasons. Such denials happen after the company has conducted a thorough investigation. In general, though, almost all term insurance policies cover accidental deaths and deaths that occur naturally or those caused by prevailing medical conditions. Also, any death that occurs naturally within a specified number of days of buying the policy and that which is independent of the cause is usually treated as an accidental death.

However, if the person dies of a critical illness or due to a disability, the policy automatically expires, and the insurance company compensates his or her nominees with the sum assured.

Exclusions for Deaths that Occur due to Lifestyle Habits

All insurance providers confirm whether the insured person smokes or has other lifestyle habits that tend to affect him or her adversely before handing out the policy. They do this due to the assumption that such people have a higher mortality rate than others. Furthermore, these people may also have to shell out extra amounts of premium to buy term insurance. Hence, insurance companies usually classify them among high-risk categories.

The insurance company has every right to deny claims if the insured person dies due to smoking or any other lifestyle habits and has not mentioned the same to the insurance company when filling out the form.

Other Exclusions

Besides death benefit and lifestyle-related exclusions, there are also several other types of exclusions, including suicidal deaths and deaths occurring due to sexually transmitted diseases. The insurance company can also deny claims if the insured person dies due to some criminal activities or due to some pre-existing medical condition that he or she hasn't specified. Each of these categories is unique and comes with a different set of terms and conditions. 

  • Suicide or Self-Inflicted Injury

    The insurance company can deny claims if the insured person commits suicide or dies accidentally due to being involved in high-risk activities such as extreme sports. In this case, the insurer assumes that the insured person did not take any precautions and was careless when performing such activities, denying requests for a claim.

    Also, almost every term insurance policy does not include suicide under death benefits. So, if the insured person dies by committing suicide, his or her nominees won't be paid the sum assured. Nevertheless, some insurance companies would still be willing to compensate for the entire amount of money unless the suicide occurred within a year of buying the policy.

    Some insurers would also be willing to refund the entire premium amount after they have deducted some administrative costs and other medical expenses.

  • Consumption of Drugs, Narcotics, or other Intoxicants

    The insurance company is not legally authorized to pay the insurance money assured if the policyholder dies by consuming drugs, narcotics, or other intoxicants or banned substances.

  • Sexually Transmitted Diseases

    Benefits for deaths that occur due to sexually transmitted diseases are also not covered under various term insurance plans. So, the insurance company won't entertain any claims made for the same.

  • Prevailing Illnesses

    Although most of the term insurance plans cover common illnesses, there is a waiting period that ranges from three months to four years before a nominee can make a claim.

  • Death of Nominees

    In case the nominee of the policyholder dies, then the legal heir of that nominee is eligible to claim the sum assured from the term insurance plans. However, the legitimate heir should have attained the age of 18, which is the legal age for making such claims. Also, the legal guardian of that heir should notify the insurance company of the same to avoid the possibility of the amount being transferred during the lock-in period. The age criteria are not constant and differ according to the provisions laid down by the IRDA.

    Also, if the nominee dies before the policyholder, then that insured person should make sure that he or she nominates another person to be eligible for making a claim. The policyholder can do this by informing the insurance company of the same or by submitting a request online. 

Documents Required to Claim Death Benefits:

Different people die under different circumstances. For example, some may die naturally due to ageing. Others may meet with an accident. And still, others may die because of a pre-existing medical condition. Whatever the cause of death, there are different procedures for claiming the sum of money provided by the insurance companies. When making a claim, nominees must submit separate sets of documents to the insurance company, which may vary depending on the type of death.

  • Natural Death

    In the case of natural death, the nominees must submit the following documents to the insurance company to make a claim:

    • The original policy documents.
    • The claim form issued by the insurance company.
    • A duly filled application form.
    • Any other documents as requested by the insurance company.
  • Accidental Death

    If the policyholder dies accidentally, then his or her nominees can claim the insurance money by submitting the following documents to the insurance company: 

    • A post-mortem report.
    • FIR or investigation reports.
    • A statement or certification of medical attendance from the doctor who performed the autopsy.
  • Pre-Existing Medical Conditions

    In case the insured person dies due to some illness or other pre-existing medical condition, the documents required to claim the insurance money are as follows:

    • Discharge summary provided by the hospital in original and other supporting medical records
    • Claim form
    • The duly filled application form
    • Any other set of documents as required by the insurance company

Death Occurring due to Any Other Reason

If the insured person has died because of a natural calamity, then the insurance company requires the evident reason for his or her death. So, the nominee who wants to claim the insurance money must submit the list of the persons who died in that natural disaster where the insured person's name must be present. Other documents required by the insurance company may include the duly filled claim form and the application form in detail.

The terms and conditions of the different term insurance plans vary depending on the type of policy. So, be sure to read them and don't miss any critical points. Otherwise, you could be losing a handsome amount of money that your loved ones have kept for you in case they pass. Not only will you not get the insurance money, but you may also lose the premium that some insurance companies would be willing to refund. For this reason, don't forget to thoroughly examine all the exclusions and inclusions laid down in the term insurance plans so that you don't miss out on your insurance money. 

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