Here’s what your term plan might not cover

Term policyis designed to keep your loved ones financially secure in the case of your untimely death. Its purpose is to give you peace of mind over the inevitable, which are almost as good as outsmarting life and its uncertainties. A term plan is an affordable, smart way to ensure a financially secure tomorrow, today. But there are some events and conditions wherein the insurer may deny the benefits of the term plan to your loved ones and before you sign upon the dotted line, it’s worth it to know what these events and conditions are. This article will give you a basic overview of these instances which are better known as the ‘exclusions’ of your term plan.

Suicide:

Any death that’s deemed by the medical experts as a suicide or that was caused by self-inflicted injuries within the first year of the policy is not covered by any term policy. After one year, if the death is deemed as a suicide or is caused by self-inflected injuries, every insurance company has different terms and conditions in regard to the cover provided. Apart from suicide, if the death is caused due to the insured person’s participation in dangerous hobbies, then again the insurance company may or may not provide a cover, as prescribed in its policy documents.

Death due to terrorist attack and war:

Most insurance companies have exclusions against death caused as a result of terrorist activities. However, in most cases, the beneficiaries do receive the cover in the case of death by terrorism on humanitarian grounds after approaching the Insurance Regulatory and Development Authority of India. When it comes to death due to war, whether the war is declared or not, most insurance companies may not pay the assured cover.To be more specific, the sum assured may be denied if the insured’s death is caused from being engaged in any military, naval or police organization. 

Natural Calamities:

Again, this is something that not everyone knows, but insurance companies are not compelled to the sum assured in the case of natural calamities like earthquakes, tsunamis and floods. This is because in the case of such events, the death toll is very high and the claim amount will run in millions and in which case the insurance companies find it difficult to settle claims.

Lifestyle diseases:

If the insured person’s death occurs due to lifestyle diseases that occur from habits like excessive smoking, drugs or drinking, then the insurance company is not liable to settle the claim. The chances are higher when the unhealthy habits are kept hidden from the insurance company. But if you do declare your unhealthy habits, the insurance company can consider paying the claim in exchange for a higher premium.

All these exclusions and the extent to which they are applicable differ from one insurance company to another, if applicable at all. While some might not consider something as exclusions there might be another insurer that does! This only highlights the importance of reading the fine print. So if you are thinking of term policy, it’s a must to read, understand and scrutinize the terms of the policy before you sign your name on the dotted line.