Things you need to know before purchasing a Term insurance

A Term insurance policy offers you life coverage for a specific period. It is best suitable if you are planning for a short term goal. However, one should be careful when opting for a term insurance plan, because there are many clauses which can render you ineligible for the final payout. An important thing to note is what kind of deaths are not covered in Term insurance. Read on to know more about them.

Death due to natural causes or health-related issues.

These kind of deaths are well within the purview of Term insurance plans. Even if a person dies due to existing medical condition or critical illness, the beneficiary of the insurer is entitled to the sum assured as the death benefit.

Accidents can happen all the time. In case of an accidental demise, your nominee is entitled to a payout under term plans. Besides Term plans also have the option of attaching a rider that gives you additional payout over the sum assured in the original plan.

Death due to critical Illness

Death due to any critical illness is covered under Term plans. It also includes sexually transmitted disease like HIV/AIDS.

Death due to existing illness

If you have an existing illness when purchasing a Term insurance plan, then it is mandatory to disclose it. If the disease is the cause for the death of the policyholder, the nominee is entitled to the payout only if the information has already been disclosed at the time of purchase. If there is a life-threatening disease that you are suffering from, the premiums might be higher, but then the claims settlement is smoother in case of a payout. This is why financial institutions require you to undergo medical tests for term insurance plans.

Death due to intoxication

Death due to alcohol or drug overdose is also not entitled to payouts under Term Insurance plan.

Homicide

We have often heard of cases where the policyholder is murdered by the nominee for money. In case any investigation reveals the involvement of the nominee in the death of the insured, then the nominee is not entitled to death benefits until the judiciary acquits the nominee.

Death due to natural calamity

Death caused due to any natural disaster or act of god like Tsunami, Earthquake, floods, is not covered by Term Insurance, unless, you have opted for any particular riders for that purpose.