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Here are types of death cases covered and not covered by life insurance

Here are types of death cases covered and not covered by life insurance

Here are types of death cases covered and not covered by life insurance
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By Anshul  Jul 24, 2020 9:20:17 PM IST (Updated)

Life insurance plans provide financial support to surviving dependents or other beneficiaries after the death of the policyholder.

Life insurance plans provide financial support to surviving dependents or other beneficiaries after the death of the policyholder. These plans give a lump sum death benefit to the nominee of the insurer on the demise of the insured (policyholder).

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However, only specific types of death events are covered by generic life insurance/term policies. There are certain excluded death cases too.
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In view of this, let’s understand what is covered and what not by life insurance policies:
Here are type of death cases that are covered under a policy:
Natural Death or Death Caused Due to Health-Related Issues
In case, the policyholder dies a natural death or due to any medical condition, the beneficiary of policy gets the sum assured.
Accident Demise
Life insurance policies provide coverage in case of death of the insured due to an accident.
"This includes death caused due to sudden, unforeseen and involuntary events," explains Rakesh Goyal, director, Probus Insurance, Insurtech Broking Company.
Death Due to Pre-Existing Illness
This is also covered in term plan.
"However, policyholders must declare it while buying the policy," says Goyal
Death Due To Suicide
While this is covered by some insurance companies from day 1, others cover it after one year waiting period, according to Pankaj Chauhan, managing director CEO, EPOCH Insurance Brokers.
"In traditional plans, higher of 80 percent of the total premium paid by the policyholder or the applicable surrender value is paid to the nominee. In case of ULIP, fund value as on date of intimation of death is paid to the nominee," says Sanjay Tiwari, Director, Strategy, Exide Life Insurance.
Death Where Life Assured Is Minor
For policies issued on minor’s life, the death benefit becomes applicable anytime on or up to two years from the date of commencement of the policy or on the policy anniversary after attainment of majority, whichever is earlier, explains Tiwari.
Here are the types of death cases that are not covered under life insurance policy, according to experts:
  • If the policyholder dies due to intoxication or overdose of drugs or alcohol.
  • If the insured dies of smoking habits which was not disclosed while buying policy.
  • Death caused due to hazardous activity or self-inflicted injuries.
  • Death of the policyholder due to STDs like HIV or AIDS (however, a few companies may cover this).
  • If the policyholder gets murdered due to criminal activity or he/she is killed by the nominee.
  • Customers should also note that miss-interpretation of any fact can also lead to rejection of claims.
    "Hence, users should always share the right information with the policymaker before buying the policy," Chauhan explains.
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