Terms & Conditions of Term Insurance Plans – All You Need to Know

The importance of having a term life insurance policy is unquestionable when it comes to protecting the financial future of your loved ones. The high sum assured at an affordable premium and flexibility in premium payment mode makes term insurance the most popular life insurance plan available today. 

In the event of your untimely demise, the policy beneficiary or the nominee can raise a claim request with the insurance company and get the death benefits. And, while most reputed insurance providers in India settle the claim without any hassles, it is subject to certain terms and conditions. 

Hence, it is vital that you carefully read the T&C while buying the policy and keep the beneficiary informed about it. While the terms and conditions may change from insurer to insurer, you must be aware of the following general T&Cs of term insurance. 

Claim rejection due to accidental demise

Generally, a term policy covers accidental death. However, there are certain exceptions, which may lead to claim rejection. Suppose the policyholder passes away due to an accident. In that case, the insurance company will investigate to understand the exact cause of demise and circumstances of the accident before approving the claim request. 

The insurers usually have a team of dedicated healthcare workers to guide them in the process, and the claim approval depends on the investigation report they submit to the insurer. 

Claim rejection for death due to lifestyle habits 

When you buy term insurance, you must provide details of your lifestyle habits like smoking or alcohol consumption. This is vital because the insurer will use this information in the future to know if your demise is linked to any such habits. Also, based on the information you provide, the insurer will determine the premium rate. 

Suppose you hide this information or fail to declare the same in the insurance application form, the insurer has the right to deny paying the death benefit to the nominee provided they find out that the death is linked to your smoking or drinking habits. 

Claim rejection for death due to self-inflicted injuries or suicide

Death due to suicide or self-inflicted injuries are permanent exclusions in term insurance. However, there are some exceptions. If the insured passes away by committing suicide within the first year of the policy, the insurer will repay the premium paid. Apart from this, the nominee may not get any other compensation. 

The terms and conditions for claim settlement on death due to suicide may vary from insurer to insurer. Hence, you must contact the insurer to understand the claim rules. 

Other reasons why an insurer may reject a claim request are as follows:

Most term insurance plans do not cover death due to STDs (Sexually Transmitted Diseases), consumption of narcotic substances, involvement in criminal 

activities, and adventurous sports like bungee jumping, skydiving, skiing, etc. 

Final Word

Buying a term plan is one of the most cost-efficient ways to secure your family’s financial future. However, not being aware of your policy’s terms and conditions may lead to claim rejection in the future. So, you and the nominee must understand the term insurance coverage, inclusions, exclusions, etc. This will help you and the nominee make an informed decision and avoid filing a false claim.