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Does a term insurance policy cover all types of deaths?

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Caring about your family is natural and we do so many things to show that gesture. However, taking them out on weekends and fulfilling all their desires is not enough. What is even more important is caring about the financial future of the family. And if you are looking for some ideas for the same, you can simply opt for a term insurance policy.

Term insurance is a life insurance product that provides death benefits to the beneficiary of the policy. The beneficiaries are usually the family members of the policyholder. Term insurance can be bought for a certain period which can be for up to 30 years. The death benefit can be availed by the nominee of the policy only if the policyholder passes away within the tenure of the policy. However, there is no monetary benefit provided if the policyholder survives through the policy period.

While deciding on buying a term insurance policy, some people wonder if the policy covers all types of deaths. Let us discuss the deaths covered under term insurance in length.

Death that are covered under term insurance 

Here are some kinds of deaths that are covered under the term insurance policies:

Death due to natural causes

If the policyholder dies of natural causes, which can be an illness also, the nominee of the policy will get the sum assured.

Death due to accidents

We often hear news about someone’s demise that happened because of an accident. It certainly does not come as a great one but the nominees can claim the sum assured from the insurer. And since it is term insurance, you can even get a rider by paying an additional premium. This will give better benefits to the beneficiaries.

Death by suicide

If the policyholder commits suicide within 12 months from the date of buying the policy, the nominee will get 80% of the premium that has been accumulated. It happens if the plan is non-linked. If the plan is linked, the beneficiary will get 100% of the accumulated premiums. The beneficiaries may not get any death benefit if the policyholder commits suicide after 12 months from the date of purchasing the policy.

Death due to critical illness

Insurance companies provide benefits to the nominees if the policyholder dies because of a critical illness. Critical illness also includes HIV/AIDS.

Death due to existing illness

While buying a term insurance policy, you must disclose if you have an existing illness.  If the policyholder dies because of the existing illness that has been disclosed to the insurance company, the nominee will be able to claim the sum assured. 

Deaths that are not covered under term insurance

There are some kinds of deaths that are not covered under the term insurance policies. Let us take a look at them as well.

Homicide

If the policyholder has been murdered and it is proved that the nominee is the culprit, there will not be any death benefit paid to the beneficiary. However, the investigation and its reports matter a lot in one such case.

Death due to intoxication

If the policyholder dies because of an overdose of drug or alcohol, the nominee will not be entitled to any death benefit.

Death due to natural calamity

In case the policyholder dies because of some kind of natural calamity such as flood, earthquake, Tsunami, etc., the nominee will not be paid any death benefit. 

Claiming the death benefits depend much on the kind of death one has died. Therefore, while buying a term insurance policy, you must check the terms and conditions, and then only make the decision. Another thing that you should be careful about purchasing term life insurance is the claim settlement ratio of the insurance company. Only if the claim settlement ratio of the company is higher, you can go for the company. 

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