What Are The Types Of Deaths Covered By Term Insurance?

Last year, you might've heard the news of Jeff Bezos going to space. When the news came out, we asked a question to our Twitter audience - if he has term insurance, whether his family will get the claim in case anything happens to him. We got very interesting replies to this. While someone replied that it won’t be covered since going to space is an adventure activity, someone else said that in case he goes missing, his nominee will receive the claim after 7 years.  

Asking that question made one thing very clear to us - despite term insurance being one of the simplest forms of insurance products, there are many misconceptions around it. And ‘types of deaths not covered by term insurance’ is a very popular one. In fact, if you search on the internet right now, you’ll come across several articles titled ‘types/ list of deaths not covered by term insurance’. There, however, is no such list! 

Our Research Team went through all available term insurance policies in detail, and guess what? With the single exception of suicide, there are no deaths a term insurance policy won’t cover. 

Suicide: The Only Exclusion In Term Insurance

Only suicidal deaths in the first policy year are an exclusion under term insurance and won't be covered. Apart from this, there are no causes of death excluded in term insurance. In case of death due to suicide, all the premium payments (minus the taxes) you’ve made to the insurance company in the first year will be paid back to your nominee.

What Types Of Deaths Are Covered Under Term Insurance? 

Here's a list of some common types of death covered in term insurance -  

1. Death due to natural causes: Does term insurance cover natural death? Yes, if you die because of old age or as a result of any disease, it will be considered a natural death and the insurer will pay the claim. 
2. Death because of accidents: Is accidental death covered in term insurance? Yes, accidents, too, are covered by term insurance. It will cover accidents that happen anywhere - at your home, workplace, in space, when you’re in the air travelling in a plane, etc. 
3. Death due to participation in adventurous activities: If you take part in risky, adventurous activities such as bungee jumping, scuba diving, paragliding, etc., and pass away, the insurance company will pay the term insurance claim to your family.
4. Death from intoxication: If you pass away because of the consumption of drugs, alcohol, or narcotic substances, your family will be paid the term insurance claim.
5. Death due to involvement in illegal activities: The insurance company will honour your family’s claim if you pass away because of involvement in a law violation or unlawful activities. 
6. Death because of natural calamities or man-made disasters: Any death that occurs due to natural calamities like drought, flood, etc., or due to man-made disasters such as war, terrorism, etc. are covered under a term insurance policy. 

Please note: 

1- This is not the complete list. The types of deaths covered depend on your policy. 

2- All other causes of death can be covered or denied depending on the exact circumstances and proposal form declarations. The insurer can investigate and postpone the claim - but in the end, they will have to settle the claim since nothing is mentioned in the policy wording. 

Keep in mind that the onus of listing exceptions and exclusions is on the insurer. This means that if no exception is clearly stated in your policy wording, you needn't presume any. 

These Deaths May Not Be Covered By Riders! 

If you’ve opted for riders with your term insurance, you should know there are a variety of deaths riders won’t cover. So, while death because of intoxication, involvement in illegal activities, participation in adventurous activities, etc. will be covered by term insurance, they might not be covered by the riders you’ve purchased along with it. 

Here’s an example to help you understand this better.

Say Arjun buys an INR 1 Crore term insurance policy and an accidental death benefit rider of INR 50 Lakhs along with it. A few years later, while the term insurance policy is still in force, he dies bungee jumping. Now, death due to participation in adventure sports is covered under term insurance, but not under the accidental death benefit rider that Arjun purchased. Hence, his family will only get the term insurance claim of INR 1 Crore - and not the rider benefit of INR 50 Lakhs. 

It is extremely crucial that you go through the policy wordings of both the term insurance policy as well as the riders you’re purchasing to understand the types of deaths covered and excluded under both. 

Summing up!

Except for suicide in the first year of buying the policy, a term insurance policy will cover all types of deaths such as death due to involvement in illegal activities, participation in adventurous activities, intoxication, etc. However, these deaths may be excluded from riders that are available with term insurance. So, if you’re buying a rider with your term plan, ensure you go through the policy wordings of the riders to know the deaths it will and won’t cover.  

Planning to buy term insurance but confused about which customisation options to pick and which to skip? 

Check out Beshak TruMatch -  the first-ever term insurance recommendation engine that recommends the right customizations you must pick so that your term plan is perfectly tailored to your family’s needs.

If you have any further questions related to what kind of deaths are not covered in term insurance or the types of death covered in term insurance, you can post them 

on the Beshak Insurance Forum and get answers from vetted experts!