Types of Deaths Covered Under a Term Insurance Plan
Types of Deaths Covered Under a Term Insurance Plan
12/30/21 6:18 AM
Considering the unpredictability of life, a crucial factor for efficient financial planning is to buy a term plan. Amongst its numerous benefits, a term plan provides an extensive cover at affordable premium rates.
Several term plans in India accommodate the individual financial needs of insurance-seekers. Term insurance companies have evolved extensively to offer a host of features that make term insurance a captivating financial proposal to secure your loved ones in your absence.
How Does a Term Plan Work?
Term insurance is the simplest financial investment to understand. In essence, it provides financial security for a pre-determined term of years. This term could range anywhere between 10, 20, and 30 years during which if the policyholder passes away, the nominee receives a death benefit insurance amount.
To avail of this benefit, the policyholder makes regular payments to the insurance company in the form of premiums. The premium amount is determined using the age, health, and death benefit insurance amount. The premium is fixed and paid for the duration of the term, which is why it is recommended to purchase term insurance when you are young. This is because the premium amount increases as you grow older.
Term insurance companies provide the option to customise your term plan basis your requirements. Policyholders can buy a term plan and strengthen them with unique term insurance riders, such as accidental death benefit, critical illness, total and permanent disability, etc., to ensure all-inclusive protection. Insurance-seekers looking for term plans in India can opt for increasing or decreasing benefits and even convert their term life insurance policy into a permanent life cover.
There is often a misconception that you need to buy a term plan only if you are married. Contrarily, a comprehensive term insurance policy is essential for any individual who has financial dependents. Tax-payers can also avail of tax exemptions when they buy a term plan to secure the financial future of their family.
Types of Deaths Covered in Term Insurance
When it comes to securing the future of your loved ones, it is important to invest adequate time in devising a proper financial plan. While you cannot foresee the future, a term plan can provide you with the necessary life cover in case of any unfortunate eventuality. In the event of your untimely demise, your beneficiaries can use the death claim to address both immediate as well as future financial needs. However, before you buy a term plan, it is necessary to acquaint yourself with the terms and conditions of the policy.
Term insurance companies endeavour to provide a comprehensive life cover, and so the term plans in India include the following deaths to provide cover against:
- Natural death or death owing to health-related issues
Term insurance plans provide a death claim to the beneficiary if the policyholder passes away due to a health-related concern or faces a natural death. Death can be caused by diseases or a medical condition, and in such an event, the nominee will receive the death benefit insurance amount of the term plan. Additionally, if the policyholder has opted for a critical illness rider, the insured receives a lump-sum on the diagnosis of critical illness pre-specified in the policy.
- Accidental death
Accidental death can be defined as a sudden, unforeseen, and involuntary event that is the result of an external, violent, and visible force. A term plan provides cover in any such scenario. If the policyholder has opted for an accidental death benefit rider in addition to their basic term insurance plan, term insurance companies will provide an extra layer of protection by giving the nominee an additional amount over and above the basic sum assured. This rider is, therefore, beneficial for those who have to travel frequently for business or for individuals who work in high-risk environments.
However, there are certain exceptions to accidental death. If the insurance holder was intoxicated while driving or had been involved in any criminal activity, the death claim can get rejected. Additionally, if the policyholder dies due to engaging in an adventurous activity such as skydiving, bungee jumping, etc., then it is excluded from the term plan life cover.
- Death by suicide
In the event that the insured member commits suicide after the first 12 months of the policy, the nominated beneficiary is eligible to receive 80% of the premium amount paid if the purchased policy is a non-linked one. If the term plan is a linked one, and the policyholder dies due to suicide after the initial 12 months, the beneficiary is eligible to receive 100% of the premium amount paid.
If the policyholder dies due to suicide before the completion of 12 months of the policy commencement, the nominee will not be paid any death benefit. The 12-month condition is in place to discourage suicide for individuals stuck in financial debts.
It is important to note, however, that not all term plans in India offer suicide cover, and so it is important to be aware of the terms and conditions of the policy, the types of deaths covered and not covered, and the subsequent clauses associated with them.
Zindagi Unlimited with Edelweiss Tokio Life Term Plan
- COVID-19 cover to ensure your family’s financial future in the pandemic.
- Non-medical under-writing option for those who are concerned about stepping outside during the pandemic.
- A Better Half Benefit to give your partner an additional 50% of your cover for when you are not around.
- Discounts on high sum assured.
- Choice of four term insurance riders to protect you from unforeseen eventualities.
When you buy a term plan, you not only need to acquaint yourself with the benefits but also the exclusions in the policy documentation. Make a point to read the life insurance policy document carefully. Having adequate knowledge can help you choose the right term insurance that is suited to your needs and will also help you prevent any discrepancy during the claim processing.
Chirag Iyer BFSI Enthusiast
Chirag is a writer and an avid reader who loves to drink coffee! His other interests include boxing, karate, and singing