Term insurance policy is the best life insurance policy. The purpose of the insurance plan will be fulfilled with the term insurance. If there is a risk of death, the policy proceeds will be paid to the nominee so that there will be a great reprieve from dependants. However, the policyholder should be aware of the limitations and exclusions so that the claims are honored by the insurance company without fail. Certain deaths are covered by the insurance policy.
Coverage of deaths
The sum assured will be paid to the nominee on the death of the policyholder. The policy should be in force and the payment will be done within the term. If the policyholder survives after the term, there will not be any benefits from the policy.
It is very much important to understand the difference between the insurance and the investment. The term plan is the purest and oldest form of life insurance. It will cover the risk of death and the payment will be made to the nominee. You should not consider the term plan as an investment. For the small monthly or annual premium paid by the policyholder, the insurance company will offer huge financial benefit upon the death of the policyholder.
The following Type of Death Covered in a Term Insurance:
If the policyholder dies suddenly in sleep, it is considered as natural death. The sum assured will be paid to the nominee upon filing the claim by the nominee.
The life insurance policy covers the accidental death as well. If the death takes place within 90 to 180 days after the accident, it will be treated as the accidental death. If the policyholder dies due to the accident, the hospitalization charges should be borne by the family members. When the policyholder is covered by the term insurance, the proceeds of the policy will be delivered to the nominee so that they will be able to overcome the financial distress in a very efficient way.
- The natural death
- Death due to health-related issues
- Death due to medical condition or disease
- Accidental death
- Additional sum assured will be paid based on the additional riders
- Covers sudden death due to unforeseen external event
- Death due to the involvement of motor vehicle accident
- Death due to fire accident
- Accidental fall from the rooftop
- Death due to drowning in floods, rivers or any other water source
- Death due to lightning strike
- Death due to earthquake
- Death due to electric shock
- Death due to cyclone or heavy storm
Benefits of term life insurance plan
While buying a life insurance plan, you should be aware of the Types of Death Covered in a Term Insurance Plan. You are advised to go through the terms and conditions of the insurance company and should compare various policies to choose the best policy for your needs.
- Covers the risk of death
- The insurance company will pay the sum assured to the nominee in case of the death of the policyholder
- Offers tax exemption under section 80C of the Income Tax Act
- The payment made to the nominee is tax-free
Death outside country
If the policyholder updates the information about his or her residence, the insurance company will cover the risk of death in a foreign country as well. The policyholder should inform the insurance company that he is living outside his country. The appropriate policy service form can be filled by the policyholder so that there will be seamless processing of the claim by the insurance company. Certain countries are marked unsafe for Indians. If the policyholder travels to those countries, the insurance company will reject the claim.
The claim processing varies from one insurance company to another insurance company. If the death takes place two years after the issuance of the policy certificate, the insurance company will investigate the matter extensively. As the insurance company will take risk in issuing a policy with huge compensation, it will double-check the facts before settling the claim. There will not be any issues if the policyholder dies 10 or 12 years after subscribing the policy. The claim settlement will be done quickly.
The term insurance plan will protect the interests of the policyholder and his or her dependents. The risk of death will be covered by the policy and the lump sum payment is many times higher than the insurance premium. However, you should be aware of the terms and conditions under which the policy can be claimed. If the policyholder dies naturally, the insurance company will process the claim and the death benefit will be awarded to the nominee. Hence, you should know about exclusions also while buying the term insurance plan.
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