Why Exclusions Under A Term Insurance Plan Are Necessary To Understand?

The Underlying reason why we buy a term insurance plan is that when you as the bread earner of the family is not there to support them the sum assured which would paid as a claim to the family members should be able to take care of their needs. It means from the laymen perspective the objective is to indemnify the financial loss arising due to the death of the bread earner of the family.

But the question what if the insurance company denies the claims of your dependent because of some exclusion in the policy which you might have missed reading during the time of buying the policy. It is always advised to read through the fine print of any plan to judge whether it is good or bad for you. You should be blindly on your agent or advisor to tell you that or when you are buying term insurance policy online you can also look into those details and just get persuaded away by the amount of premium the insurance company is asking for a particular amount of cover.

Take the case of suicidal death .In case when a claim is made against a term insurance plan, first thing an insurer would do is doing a proper investigation the case. Though you dependent might submitted the death certificate to raise the claim but if the insurer finds that the death is because of suicidal motives then the insurer holds the right to reject claim. Most term insurance plan do have this exclusion in the first year the policy.

Read Related Article- Is There Any Right Age To Buy A Term Insurance Plan?

Another great example is in the case of accidental death. Though in any form of death the insurer has repay the claim but If it is a case of accident death there are certain criteria under which the claim can be rejected by the insurer. The insurer holds the right to reject because of exclusion term of your term insurance policy contract. Below is the list of situation when in case of accidental death an insurer can reject a claim

  1. In case the accident is due consumption of alcohol or drugs
  2. In event of war
  3. A case of accidental death when the policy holders was involved in a racing activity or an activity which is hazardous in nature
  4. In the case the activity in which the policyholders is involved is defined as criminal acts as per law of the land
  5. In which case the accidental is due cases like pregnancy or child birth or complication arising from it,
  6. Or when the death is due some pre-existing decision here the claim can be rejected on the point non proper disclosure of facts

Other than the above reasons there are exclusions in case death happening due to lifestyle diseases like death due smoking. You are always advised to make a full closure of thing at the time of buying the policy even though for this you need to pay some extra premium but the minimum extra amount that you would pay would reduce your claim rejection rate by close to 90% .

So while buying a term plan you should always look at all these exclusions which can make or break the scenario. Though reading the fine print of every plan might be more of a tedious job but it is worth compared to the future loss which your dependent might have to suffer. Even if you are buying a term plan through insurance comparison website you should compare term insurance plans based upon these exclusions.  

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