What Does Life Insurance Cover?

Are you considering purchasing a life plan to provide financial security to your loved ones? If so, a thorough understanding of the aspects and benefits provided under a life insurance plan is essential. It is also critical to ensure your beneficiaries are fully informed about the terms and conditions of your policy. So, read on to learn what’s included in a life insurance plan and its exceptions and exclusions.

What Comes Under a Life Insurance Policy?

A life insurance policy provides financial support to your loved ones in the event of your untimely death. In such a situation, your family can use the benefit for various expenses, including paying off existing debts or replacing the sudden loss of income. 

On average, life insurance can provide death benefits in the following scenarios:

• Natural causes: Death due to completely natural causes such as serious illness, old age, or other health-related issues are covered.
• Accidental cases: Most life insurance policies cover sudden accidents that cause unexpected death of the insured person.

Exceptional Cases: In some cases, there may be waiting periods or conditions that you may have to undergo before you are able to access a specific benefit. This is often the case in the following situations:

• Suicide cases: Many Insurance policies generally cover suicidal deaths, but only after the suicide clause is not in effect. The suicide clause stays in effect for the first two years and prevents the beneficiary from claiming benefits if the insured passes away by suicide. This is to ensure that an individual does not purchase a policy with the intention of committing suicide shortly thereafter.
• Homicide or manslaughter: A lot of policies also offer coverage for deaths caused by homicide or manslaughter. However, to claim the benefits, the beneficiary person must not be subject to suspicion of the insured person’s death. 

What Does Term Life Insurance Not Cover?

Although there is never a restriction on how the beneficiary chooses to utilise the provided funds, many situations typically occur when the beneficiary is not aware of the terms and conditions of the policy. Given this reason, you must learn the cases in which the insurer will deny the claim for coverage. They are as follows:

• Expired or lapsed policies: Term Life Insurance policies provide coverage for a specific period. If death occurs after the coverage period, the insurer is not responsible for providing any claim.
• Fraudulent information: If your insurer discovers any intentional misinformation on your application that does not match the information provided at the time of death, the coverage claim can be rejected.

Apart from that, many policies exclude deaths caused by indulging in unsafe activities, such as extreme sports, acts of war, or risky professions. This helps them manage the risk of loss by not covering high-risk activities from the start. Thus, it is critical that you understand and read the policy terms and conditions before finalising one.

Wrapping Up

Life insurance is a must-have financial safety net for your family, especially when you are the sole earner of your household. You can also customise your policy by opting for riders and additional coverage. Some common riders preferred by policyholders are accelerated death benefits, critical illness or chronic illness death benefits, and long-term care riders. You can also utilise a term insurance premium calculator to estimate the premium amount you will be required to pay after the particular add-ons.