Various types of life insurance plans are available in the market, and each one has its terms and conditions. Purchasing a term insurance plan will give you peace of mind that your loved ones will be financially secure in case of your absence. You pay a premium for a specific period and in case of an unfortunate incident during the policy’s tenure, your nominees receive the death benefit. It is best to use a term insurance plan calculator to get an estimate of the premium payable according to the sum assured that you select.
It is normal to get confused about the term insurance age limit and the payout that the insurer offers on the death of the policyholder. In a term plan, you will not receive any maturity benefit in case of survival. Moreover, you need to pay the premiums regularly during the tenure to ensure that your nominees receive the sum assured in case of an unfavorable event in the future.
Term plans have a few exceptions, wherein the insurer may reject the claim of your nominees. Having awareness of these before you buy term insurance online will prove helpful. The insurer may decline the claim in instances, like:
- Murder of the policyholder
In case of a murder, there will be an investigation, and if the nominee is involved in the crime, the insurance company will not accept the claim. They will withhold the payment until the case is resolved. If the murder is due to involvement in a criminal activity, the nominees will not receive any amount. However, if the policyholder had a criminal record but passed away due to a disease, the insurance company will pay the death benefit to the nominees.
Insurance companies do not pay the sum assured to the nominees in case of suicide during the first year of the policy. However, if the policyholder commits suicide after the end of the first year from the date of policy purchase, the nominees will receive the sum assured.
- Death due to participation in hazardous activities
A term plan does not cover demise due to involvement in adventurous or hazardous activities. If you participate in adventure sports, disclose the same while purchasing the policy. If you fail to do so, the insurer will not approve the claim.
- Death because of HIV/AIDS
If the policyholder dies due to HIV/AIDS, the insurance company will deny the claim.
- Death occurred in a different country
A term insurance plan does not provide cover if the policyholder passes away in a foreign country. It is best to avoid international travel when one is unwell. However, if it is unavoidable, do note that the nominees will not receive the sum assured in case of an untoward event.
- Death caused due to an undisclosed habit
The policyholder must provide complete information of his or her habits while investing in the term policy. If he or she hides these lifestyle-related details and dies due to an undisclosed addiction, the insurer will not honor the claim. An example is the declaration of smoking habits and any illness, like cancer, caused due to this habit.
- Death during childbirth
If the policyholder dies during childbirth or due to complications in pregnancy, the insurer will not pay the sum assured to the nominees.
- Death caused by a natural disaster
A term plan excludes death due to the occurrence of natural calamities like earthquakes, floods, or tsunami, and the nominees will not receive the sum assured.
- Death under the influence of alcohol or drugs
A term insurance plan will provide the sum assured to the nominees if the policyholder dies due to an accident. However, there is a norm over here. If the policyholder meets with an accident and dies after consuming alcohol or drugs, the insurer will reject the claim.
Before you buy term insurance online, understand these clauses. Having complete information about the inclusions, exclusions, and other aspects like the term insurance age limit will ensure that there are no discrepancies when the claim is being processed.