What is Covered by Life Insurance And What's Not?

  • Life Insurance

Are you planning to buy life insurance? First off, congratulations for making a smart financial decision!

Life insurance can be of great help for you and for your loved ones. It makes it easier for you to achieve your major life goals, it helps you save or invest for the future, and above all, it ensures that in case something untoward happens to you, your family is financially well-protected.

That said, before you buy a life cover, you need to know exactly what is included in your policy. What does life insurance cover, and what does it not? Interested in finding out the answers to this? We’ll give you all the details.

What does life insurance cover?

Broadly speaking, life insurance covers death of the policyholder from all natural causes. In addition to this, life covers also offer financial protection in case the policyholder passes away due to any illness or accident.

There are also riders that specifically give you coverage for certain need-based situations. Here are some cases in which riders can offer additional financial benefits.

  • If the policyholder is diagnosed with a critical illness
  • If the policyholder suffers any permanent partial or total disability due to an accident
  • If the policyholder passes away due to an accident

As you can see, a life insurance policy offers you extensive coverage. You can also enhance that coverage with riders, as mentioned above. However, there are some specific types of death that life insurance policies generally do not cover.

What does life insurance not cover?

Before you buy a life cover, you need to know what kinds of death are excluded from the policy. It is also important to educate your nominees about this, so they can make an informed decision if they ever need to raise a claim on your life insurance policy.

So, let’s delve right in and take a look at what is typically not covered by life insurance.

  • Suicide of the policyholder

    The whole point of a life insurance policy is to cover the unexpected demise of the policyholder. So, from certain angles, a suicide may not be considered as an entirely unexpected occurrence. Nevertheless, most life insurance policies do cover death due to suicide - but only after a predetermined period. Generally, death due to suicide is not covered the first 1 year or so.

  • Murder of the policyholder in specific cases

    Generally, murder of the policyholder is covered by life insurance. However, in the following two cases, murder is not covered.

    • If the nominee was involved in the crime
      In case the policyholder is murdered, and investigations reveal that the nominee was involved in the crime, the life insurance company will not cover this demise.
    • If the policyholder was involved in any criminal activity
      Murder of the policyholder will also not be covered if it occurred because of the policyholder's involvement in criminal activity of any kind.
  • Death under the influence of alcohol or drugs

    Generally, life insurance providers do not offer covers to people who consume alcohol or any other narcotic substances. But a person may develop this habit later on, or they may withhold this information while purchasing a life cover. In case the policyholder passes away due to intoxication by consuming alcohol or any other drugs, life insurance will not cover such instances.

  • Demise on account of participation in any dangerous activity

    Some activities like hiking, paragliding, bungee jumping, car or bike racing and the like can be extremely fun - and also extremely dangerous. So, if a policyholder passes away due to accidents during such hazardous activities, life insurance will not cover such deaths.

  • Death from pre-existing health conditions

    Policyholders may sometimes have some pre-existing health conditions such as heart ailments, diabetes or any other chronic illnesses at the time of purchasing the policy itself. These conditions need to be disclosed during the purchase. And if the policyholder passes away due to these conditions, the life cover will not include such deaths.

  • Demise due to childbirth

    Death due to childbirth or related complications have greatly reduced in recent years, thanks to medical advancements. However, there are still many women who pass away due to complications following the birth of their child, or during childbirth itself. Life insurance generally does not cover such deaths.

  • Death due to a natural disaster

    Natural disasters like tsunamis, earthquakes and hurricanes also cause a lot of death and destruction. However, a person who passes away due to any such natural disaster will not be covered by their life insurance plan. It is important that nominees are aware of this, because a claim in such a case would be rejected.

  • Death due to an undisclosed disease or harmful habit

    Many times, policyholders with harmful habits like smoking or drinking may not disclose these details in their proposal form when they first buy the life insurance plan. However, if a policyholder passes away due to these habits later on, the life insurer will not cover such deaths, because this information was withheld from the insurer at the time of purchase. That’s why it is always important to disclose all information accurately and completely when you purchase your life cover.

  • Demise due to terrorist attacks

    Lastly, terrorist attacks, although not very common in recent years, can lead to a policyholder's death. Such incidents, however, are not covered under life insurance.

Summing up

This should give you a comprehensive idea of what's covered and what isn't. Still, before you buy your life insurance policy, make sure you read the policy document and understand the inclusions and exclusions clearly. And also educate your nominee about these details, so they know what to expect if they have to file a claim.

Read next: QUESTIONS TO ASK BEFORE BUYING LIFE INSURANCE

In addition to knowing the inclusions and exclusions, there are also other aspects of a life cover that you should look at before buying life insurance. Our blog on this subject explores the many key questions to ask before you purchase a life insurance plan.

Read it here

WANT COMPREHENSIVE COVERAGE THAT COULD PROTECT YOU TILL THE AGE OF 100? YOU DON'T HAVE TO LOOK FAR.

The ABSLI Vision LifeIncome Plus Plan gives you the option to enjoy comprehensive coverage till the age of 100. You can also enhance the coverage with optional additional riders.

There’s more too! You don’t have to wait till the end of the policy term to enjoy the plan's benefits. Instead, you get guaranteed survival benefit payouts after the premium payment term itself.

Know More

ABSLI Vision Life Income Plus Plan (UIN: 109N131V01) is a non-linked participating individual life insurance savings plan. GST and any other applicable taxes will be added (extra) to Your premium and levied as per extant tax laws. An extra premium may be charged as per our then existing underwriting guidelines for substandard lives, smokers or people having hazardous occupations etc. All the benefits are payable subject to the terms and conditions of the Policy. All policy benefits are subject to policy being in force. ADV/9/21-22/1037

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