Term Insurance Waiting Period

 

What the term insurance waiting period is

 

As mentioned previously, there are no specific waiting periods in term insurance plans except for suicide1. Coverage is usually provided from the first day of policy inception for accidental and natural deaths. However, in the case of suicides, there is a waiting period of 12 months, during which the coverage is restricted depending on policy terms and conditions.

Moreover, if there’s an early claim within the first two years of the policy, the insurance company might investigate the cause of the claim depending on the circumstances of the case. This is done to detect a possible misrepresentation or non-disclosure of material fact. If everything is found satisfactory, the claim is settled.

 

Reasons Why a Term Insurance Plan Has a Waiting Period

 

Some reasons for imposing a waiting period in some cases are as follows –

• To avoid the possibility of a fraudulent claim
• To protect the insurance company from losses resulting from early claims
• Even in the case of early death claims, if there’s an investigation, the insurance company tries to find out if the principle of utmost good faith was adhered to. If any material fact was hidden or lied about, the company might reject the claim.

 

Types of Waiting Periods in Term Insurance

 

The common types of waiting periods in term insurance are as follows –

 

1. Suicide clause waiting period²

 

Under most term insurance plans, there’s a waiting period of 12 months from the date of policy inception or revival for the coverage of suicidal death. If the life assured dies within this waiting period, the death benefit is not paid. In such cases, the higher of the premiums paid or the acquired surrender value is refunded.

 

2. Critical illness rider waiting period³

 

If you choose a critical illness rider with your term insurance policy, there might be a survival period under the rider. This period specifies the duration for which you must survive   after being diagnosed with a covered critical illness to qualify for the rider benefit.

 

Conclusion

 

When buying a term insurance policy, know the applicable waiting period to understand the scope of coverage. Usually, your policy will not have any waiting period but the waiting periods for suicide and critical illness rider are common. So, check these tenures and know what to expect from your term insurance plan.

 

FAQs

 

 

1. Does term insurance for patients with critical illness have a waiting period?

 

Term insurance for patients with critical illness does not have a specific waiting period. However, there might be a survival period under the critical illness rider depending on the rider terms and conditions. This period specifies the duration for which you must survive after the diagnosis of the critical illness to be able to claim the critical illness benefit.

 

2. What is the minimum waiting period for term insurance?

 

The minimum waiting period depends on the type of waiting period applicable in the term insurance plan. In the case of a critical illness survival period, the duration can range from 30 to 90 days, while for suicide coverage, the period is usually 12 months and the same may vary among different insurance providers.

 

3. Can the waiting period be reduced or waived?

 

Term insurance waiting periods cannot be reduced or waived. They are usually fixed, if applicable.

 

4. Does the waiting period affect the payout of the term insurance policy?

 

If there is a waiting period and the claim occurs during the waiting period, the payout will be affected. For instance, in the case of a suicide clause, if the claim occurs during the applicable waiting period, the actual death benefit is not paid.

Reference

• https://www.livemint.com/money/personal-finance/do-term-insurance-plans-have-a-waiting-period-after-purchase-11668101940216.html
• https://economictimes.indiatimes.com/wealth/insure/life-insurance/suicide-is-covered-under-life-insurance-all-you-need-to-know/articleshow/70444325.cms?from=mdr
• https://www.forbes.com/advisor/in/life-insurance/what-are-riders-in-a-life-insurance-policy/

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