Term insurance covers all kinds of death except for certain types such as suicide (within the first 12 months), accidental death under the influence of alcohol, etc. Even if the policyholder dies due to a terminal disease within the policy term, the company will provide compensation to the nominee or legal heir. In case of both accidental deaths and sickness deaths, the nominee must file the claim to the company to receive the compensation amount. Unless there is any fraud, the company will settle the claim amount after verification.
Consider this scenario for example. Mr. Gupta is a 55-year old man who has term insurance coverage till 60 years. He has coverage for Rs.2 crore. He is recently diagnosed with a terminal disease. The doctors have given him 6 months of life. He has a family with two kids. Following his death, his dependents can file a claim request to the company and get the full sum assured amount. In other words, even deaths due to sickness are also covered by term insurance plans.
In case of the death of the policyholder, the company must be notified immediately. Also, the claim must be filed as soon as possible. It is better to keep the company in the loop regarding the claim process. The company’s customer care department can be contacted to clear any doubts in the claim settlement process.
While life insurers provide coverage for sickness deaths, not all kinds of deaths are covered by them. If the death of the policyholder arises due to participation in any adventure sports or hazardous activities, there will not be any compensation to the insured. Similarly, any deaths arising out of participation in illegal activities are also not covered by life insurance. Apart from certain exclusions such as this, all other deaths are covered by life insurance policies.