In the event of your premature death, a term insurance plan is one of the preferred ways to protect your family from financial stress. One of the major term insurance benefits lies in the fact that it offers your family the financial assistance needed to achieve their life’s goals and objectives. However, does term insurance cover natural death? If this question is something that is running on your mind, here is some information that can help you out.
Does term insurance cover natural death?
In short, yes. A term insurance plan does cover death due to natural causes. In an event where an insured person faces a natural death, the insurer is legally obligated to provide their nominees with all the death benefits as specified on the policy document.
That is not all. Other than death due to natural causes, there are also other types of deaths that are covered by a term insurance policy. Furthermore, an insurance company may also stipulate certain types of deaths that are not covered by the policy.
Therefore, as a potential investor of a term insurance plan, it is extremely essential to know the types of deaths that are covered and the ones that are not covered by a term insurance plan. That said, let us look at the different types of deaths and ascertain whether they are covered or not by a term policy.
Types of deaths covered by term insurance
The types of deaths that are covered by a term policy is actually dependent on the insurance company and the policy terms. But generally speaking, the following types usually qualify for term insurance benefits -
1. Deaths arising out of natural causes
As we have already seen above, the death of an insured person arising out of natural causes are automatically covered by a term plan.
2. Deaths arising out of a medical illness
If an insured person dies because of a medical illness or a disease like kidney failure, such deaths are also usually covered by a term plan. However, here is something that you should note - coverage for medical illnesses and diseases are entertained by the insurer only if they arise after the purchase and initiation of a term plan.
3. Deaths arising out of accidents
Almost all term insurance plans also tend to usually cover accidental deaths as well. And so, if an insured person dies due to an accident involving a fire, a vehicle, heavy machinery, or even electrical shocks, among others, their family can still claim death benefits from the insurer.
4. Deaths arising out of COVID-19
With the coronavirus pandemic raging through the world, many prospective term insurance investors are left wondering whether a term plan would include coverage for the disease. Thankfully, term plans do offer coverage to deaths arising due to COVID-19 provided a person contracts the disease after the purchase of the plan and not before.
Types of deaths not covered by term insurance
Now that you are aware of the types of deaths covered by a term insurance plan, let us look at the ones that are typically not covered -
1. Deaths by suicide
Generally, most term insurance policies exclude coverage for deaths arising out of suicides. All such plans cover such deaths with a one-year exclusion. Therefore, it is a good idea to check with your insurance provider to ensure their stance on deaths by suicides.
2. Deaths arising out of participation in criminal activities
If the insured person dies as a direct result of his participation in criminal activities, such a death is automatically excluded from the policy coverage.
3. Deaths arising out of the consumption of alcohol or drugs
When an insured person dies, whether by accident or otherwise, under the influence of alcohol or drugs, such a death would automatically cease to be covered by the term insurance policy.
4. Deaths due to undisclosed pre-existing medical conditions
When you apply for a policy, you are required to disclose any pre-existing medical and health conditions that you are suffering from. If you fail to disclose any such condition and ultimately your death arises owing to such undisclosed pre-existing conditions, your insurer may not honor the claim for the same.
The above-mentioned list of the types of deaths covered and not covered by a term policy is merely illustrative and not exhaustive. The list of coverages and exclusions are dependent on the term plan as well. For instance, while one plan may not cover suicidal deaths, another one might provide coverage albeit with certain conditions.
Therefore, it is always a good idea to get in touch with your insurance provider regarding the types of deaths that are covered and excluded. This way, you would not only get a better idea, but also get to make an informed decision.