In the contemporary era, securing plans like term insurance and life insurance has become crucial. However, it is essential to delve into the factors that could pose challenges in obtaining the insurance claim, rather than solely focusing on the benefits. Term insurance, a type of life insurance, offers coverage for a specified payment period, ensuring that if the insured person passes away during the policy term, the nominated beneficiary receives the coverage amount in a lump sum, providing financial stability to the family. Unlike traditional life insurance, term insurance does not yield maturity returns. Various situations can lead to claim denials, and prospective buyers should be aware of these conditions before investing in term insurance.
1. Accidental Death Under Intoxication: Although an accidental death cover is part of the term plan, if the policyholder meets their demise while driving under the influence of intoxicants, the claim is rendered invalid.
2. Drug and Alcohol Addiction: If the policyholder, addicted to drugs or alcohol, succumbs to this habit leading to death, the insurance company may refuse to pay the claim amount.
3. Engagement in Adventure Sports: Death during adventurous activities can result in claim rejection. Activities such as car-bike racing, skydiving, scuba diving, para-gliding, and bungee jumping fall under this category.
4. Death During Criminal Investigation: In cases where the policyholder is murdered during the policy term, and the nominee becomes a suspect during police investigation, the claim request is halted until the nominee receives a clean chit.
5. Concealment of Serious Illness: If, during the policy purchase, the policyholder conceals information about a serious illness and subsequently dies due to that undisclosed illness, the claim can be rejected. Additionally, death due to HIV/AIDS is not covered under the term plan.
6. Natural Disasters: Death resulting from natural disasters such as earthquakes, storms, landslides, etc., is not covered by insurance companies under the term plan.
7. Involvement in Criminal Activities: According to the IRDA’s insurance regulations, if the policyholder engages in criminal activities leading to their murder, the claim amount is not disbursed.
8. Maternal Death: In the unfortunate event of a woman policyholder passing away while giving birth, the claim amount may face obstacles.
Potential buyers are advised to meticulously read the terms of the term insurance plan and ascertain whether the causes of death align with the policy’s coverage. Understanding these conditions is crucial, as claim money is only received if the policyholder’s death corresponds to the circumstances covered under the term plan.