Types of Death Covered in Term Insurance

When we consider the unreliable situations of our life the first point which comes to our mind is how to secure the future of our loved ones and for this, we do proper financial planning, like a Term Insurance plan. The Term Insurance Plan is a well-liked option for Insurance seekers.

Term Insurance Plan is also known as life Insurance. It can easily be available at affordable premium rates to protect your family from any financial crises in the future.

Term Insurance Plan is the very oldest Insurance plan which gives you payment of the sum of money to the nominee for their assurance on the death of the insurance holder. But only on the condition that is the payment will be made when the policy is in effect or within the incumbency. If the Insurance holder survives the Term Insurance Plan comes to an end and will not be payable.

Procuring a Term Insurance Plan is like having peace of mind and also financial protection for your reliant. It offers tax benefits also on the premiums paid under section (80C) of the Income Tax Act 1961 and if death happens under section 10(10D) of the Income Tax Act, it provides tax-free payment to your nominee. Many Term Insurance Plans in India reconcile the individual financial needs of insurance seekers. Term Insurance Plan is the lowest insurance premium plan of all types of life insurance plans.

How’s the Term Insurance Plan Works?

Term Insurance Plan is very easy to do financial investment and to understand. In substance, it offers financial security preset terms of years. The Term range could be anywhere between 10, 20, and 30 years also, if the insurance holder passed away, then the nominee receives a benefit amount of death.

For the usefulness of this benefit, the policyholder has to make timely payments to the insurance companies in the form of premiums. In Term Insurance Plan, the premium amount is decided by using the age, health, and death benefit insurance amount.

In Term Insurance Plan, the premium amount is fixed by the insurance company and paid for the term, that is why it is suggested to purchase Term Insurance Plan when you are young. As you grow older the premium amount increases also.

Term Insurance Plan companies give the offer to customize your term plan according to your requirements. A policyholder can easily buy a Term Insurance Plan and build up to them with a unique Term Insurance Plan, such as accidental death benefit, critical illness, total and permanent disability, etc., to ensure all-inclusive protection. Insurance seekers in India analyse term plans for increasing or decreasing benefits and even convert their Term Insurance Plan policy into a permanent life insurance policy cover.

So, as of now, we know that the Term Insurance plan pays the amount only on the death of the policyholder. Let’s have a look at what shorts of death are covered under the Term Insurance plan.

What types of death covered in term insurance plan

When it comes to protecting the future of our loved ones, it is very important to infuse proper time to devise a proper financial plan. While you are not able to see the future, a Term Insurance Plan helps you with the essential life cover in any unfortunate future condition. In the future, if your loved ones face any crises, they can get benefits by using death claims for their future needs. Before purchasing any Term Insurance policy, it is necessary to get familiarized with the terms and conditions of the insurance policy.

So, here are various types of death covered in the Term Insurance Plan which we are located here:

• Natural death or death caused by medical-related issues

This is the type of death covered in a Term insurance plan which is coming under the life insurance policy. This type of term insurance plan offers the death claim to the beneficiary when the insurance policyholder passes away due to any health-related or medical problem. Causes of death can be any disease or any medical issue. Under such circumstances, the nominee of the insurance policyholder will get a certain sum of the amount of the term plan.

If the policyholder passed away in his sleep it comes under natural death. While the policyholder suffers from any disease and suddenly dies then this condition is treated as a health-related issue. Such a type of death is covered in term insurance plans.

• Death due to accident

Accidental is a type of death covered in a term insurance plan also. Some death insurance plans have added riders attack also in their term insurance policy, which provides you some additional sum of amount on death due to accident. Accidental death can define as a sudden, unexpected, and unplanned event held by an external, violent, and visible force. 

The death due to an accident is covered up under the death insurance plan. However, there are some certain exceptions of death due to accidents. In this death insurance plan, if the death of the insurance holder is caused by the influence of alcohol or having any type of drug while driving or having involvement in any criminal activity, this type of death claim is rejected by the insurance company. The life insurance policy also includes death occurred in any adventurous activity such as skydiving, parachuting, rafting, bungee jumping, etc.

• Suicidal death

If the insured member commits suicide during the initialism of 12 months from the beginning date of the insurance policy, the beneficiary gets 80% of the premium amount of the policy received from the death insurance plan policy. 

However, if the insurance policyholder committed suicide before the completion of the one year of the policy the nominee will not get any sum of the amount from the insurance policy. While the policyholder commits suicide after  12 months of the policy taken then the nominee gets the full assured sum or death benefits according to the clauses. This type of death is covered in term insurance plans but some insurance companies may not offer insurance coverage for suicidal death.

It is essential to know that, before purchasing any insurance policy you have to go through all terms and conditions of the policy because in India every insurance company will not provide suicidal cover. 

• Involuntary injuries

In this case, if the death of the insured happens by self-inflicted injuries or dangerous activities the claim made by the nominee will be rejected by the insurance company. The death insurance plan policy does not cover these types of death.

• Homicide 

In case of murder of insured by the nominee,  the insurance policy company will reject your claim. The plan will be put on hold until the case gets clearance from the investigation.

• Calamity death 

Generally, the Term Insurance Plan will not provide coverage to the insured family if the death is caused by any natural calamity situations like thunderstorms, earthquakes, tsunami, etc. Thereafter, the nominee of the death insurance plan policy receives an assured amount as a death benefit by the insurance policy company.

What type of death is not covered under Term Insurance Plan?

Term Insurance Plan comes up with an affordable premium rate and offers financial protection to the nominee of the insured, in case of any incident. A tax-free benefit is received by the beneficiary if the insured is dead during the policy incumbency. Even if you have the best option for your insurance plan, it will be better to have some knowledge about the various type of deaths that are covered or not covered by the Term Insurance Plan in India. So, it is always better up to date yourself from all the terms and conditions of the insurance policy so that there will not be any dreadful situations which your family members and dependent face upon your death. Let’s have a look at what type of deaths are not comes under the Term Insurance Plan.

• Death comes under the influence of having drugs or alcohol while you are driving.
• Death caused by participation in bike and car racing events.
• Death is held by participation in any adventure sports.
• Death caused by pregnancy and childbirth.
• Death caused by preliminary health condition.
• Death due to participation in criminal or illegal activities.

Benefits of having Term Insurance plans

Term Insurance Plan gives benefits to the nominee on the death of the policyholder who is the income producer in the family. The pay-out amount can be a lump sum, monthly installment, or both depending upon the choice which will be made on the purchase of the Term Insurance Plan.

So, the death insurance plan or a term plan protects from an unfortunate death. In simple terms, a death insurance plan policy helps you to protect your family financially in case you are not around them. Not only this, you can take various benefits which are available with the term plans.

Following are the benefits of having term insurance policies:

• Affordable premium rate

A death insurance plan which comes under a term insurance policy is available at an affordable price. As we compare the life insurance policy to other policies, term insurance policy is provided at a very affordable price which can be easily afforded by everyone.

• Understandable easily

While you are buying life insurance, you could find it problematic to understand the specific insurance term from various life insurance policies. So, this is one of the prime features of the term insurance policy that can be easily understandable.

• Various benefit options from death

If you are paying EMI’s of your new house, car, or a personal loan you have borrowed and in your absenteeism, all your financial liabilities bring a burden on your family. So, a term insurance policy provides various payout options to you by death insurance plans.

• Tax benefits

The term insurance policy gives tax benefits also. While you are paying the premium for the death insurance plan is tax-deductible, the pay-out is also comes with the tax exception as per the surviving tax laws.

Why would we choose a term insurance plan?

You could believe nothing unpredictable thing will happen to you based on the lifestyle you follow. However, there is always a risk of unfortunate death through external factors like accident or disease, etc. which are not comes under your control. Buying a life insurance policy or death insurance plan is necessary because it supports your family to minimize the financial crises that might be faced by your family in your absence. 

Conclusion

When you purchase a term plan, you do not only need to familiarize yourself carefully with the terms and conditions of the insurance policy but also know about the benefits from this. Having proper knowledge will help you to choose the right term insurance that is fit to your needs and will also help you inhibit any inconsistency during the claim process of the insurance policy.

Term Insurance Plan – FAQs

Q1. What is a term insurance plan?

A Term insurance plan is a legal contract that is held between the death insurance plan company and a buyer. In this contract insurance companies collect a monthly premium regularly from the buyer. In case a policyholder passed away within the period, the family of the policyholder receives the preset amount of sum.

Q2. Why would we need a term insurance plan?

The term insurance plan is necessary for you because if you are the only jobholder in your family or in any case you passed away, it will help your family in financial crises. It can also be useful if you have to pay some liabilities like home loans, car loans, or any other debt. So, term insurance plans safeguard your family from any financial crises in the future.

Q3. When will you have to buy a term insurance policy?

You will have to buy a term insurance policy at your young age, so it will grow when you get older. If the policyholder has natural death, the family of the policyholder will receive a huge amount of money from the insurance company. 

Q4. How will you decide the incumbency of the policy?

Now, this also depends on how early you buy the term insurance policy. The thumb rule of the insurance policy is to buy it for the maximum incumbency possible, and release it when it is not required.

Q5. What type of death is covered in a term insurance plan?

All types of death covered in term insurance plan including natural death, or accidental death, or death due to serious illness, etc. except those which are not mentioned in policy contract terms. Also note that, if you died outside  India this type of death is covered in the term insurance plan policy also.

Q6. What type of death is not covered in a term insurance policy?

If the policyholder passes away in any natural calamity like earthquake, tsunami, floods, etc. will not come under the term insurance policy. Please note that death is not covered by the term plan which is not mentioned in the policy terms and conditions.

Q7. What benefits do we get to have a term insurance policy?

You will get the following benefits:

• Huge assured sum amount at an affordable premium price
• Easily understandable
• Various payout options are available to get the death benefit
• Tax benefits
• Serious illness coverage also
• Death benefit due to accident
• Premium return option 

Q8. If you don’t die what will happen to your term period policy?

The insurance plan will be finished at the end of the policy term plan. Based on the allocation offered by the policy company, you can also regenerate the policy to continue life protection. So, research well before purchasing any term insurance policy.

Q9. How would you choose the right term insurance plan?

First of all, you will have to go through the terms and conditions of the insurance policy carefully, while you are buying it. You can also compare the term plan of a policy company with other insurance companies, which will be easy for you to choose the right term plan.

Q10. What should I know before purchasing a term plan for the first time?

In today’s there are various doubts faced by the customers when they come to purchase a term insurance policy. Customers get confused while they are purchasing a term insurance policy, which policy they have to buy, and for how much period.

Before purchasing any term insurance policy you have to carefully look after all the terms and conditions of the policy. You should buy the policy in your 20’s so that you will get the high sum assured at an affordable price. It will provide you with income tax benefits also. 

All types of death are covered under these term insurance policies. Term insurance policy protects your family members from uncertain future financial crises when you are not present for them.