Does Term Insurance Cover Accidental Death?

While Niraj and his family had long assumed that a term insurance would be more than enough precaution for beneficiaries, his father’s death at the hands of a speeding taxi came as a surprise in more ways than one. When the family approached the insurer to claim their dues, they were informed that his father’s policy had not covered accidental death and that they would not be receiving any sum assured upon Niraj’s father’s death. Niraj then approached a family friend, who was also an insurance agent, and asked him, “Does term insurance cover accidental death?”. The family friend explained that while term insurance policies acted as coverage and paid an assured sum to the beneficiaries in case of the policyholder’s death, this may only be restricted to death from situations described within the policy.

A term insurance policy is a simple policy that offers protection against the policyholder’s death. The policy will provide a sum assured to the beneficiaries upon the policyholder’s death and this may be accompanied by features such as the family or the policyholder being paid a certain monthly income upto a certain time period. However, as with most other insurance policies, it is essential to read the fine print on the policy before purchasing it. The fine print at the end of the policy document lists all the exclusions that are not covered under the term insurance policy. While term insurance is a straightforward insurance plan, it offers several riders alongside it such as cover for accidental death or by critical illnesses. By opting for these riders, policyholders can ensure that their family is not left unprotected in case of their death due to such causes.

“Does term insurance cover accidental death?” The answer to this is yes, but only if the policyholder decides to opt for an accidental death rider along with their base insurance policy. Most accidental death protection covers any bodily injury resulting either solely or directly due to an accident caused by outward, violent or visible means, wherein this injury leads to death within 180 days of the policyholder.

However, payouts under the accidental death cover are also are bound by certain conditions. Insurers will not pay the sum assured if death in case of accident has occurred through or as a consequence of any of the following situations:

1. If the accident is caused due to self-inflicted injury, suicide, war or invasion, injury sustained while committing any criminal activity with criminal intent or even death while the policyholder is under the influence of alcohol, narcotic substances or even drugs that have not been prescribed by a doctor.

2. If an accident occurs to the policyholder during riots, civil commotion, rebellion, war, invasion, hunting, mountaineering, steeple chasing or racing of any kind, bungee jumping, river rafting, scuba diving, paragliding or while indulging in any such adventurous sports or hobbies.

3. If the policyholder commits a breach of law with criminal intent, and loses their life in its pursuit, the insurer is not bound to pay back the sum assured to the beneficiaries of the policyholder.

4. An accidental cover rider on a term insurance cover will also not provide benefits to the policyholder’s beneficiaries in case of the policyholder’s death while they are engaged in any aviation or aeronautical activity in any capacity other than that of a fare-paying, part-paying or non-paying passenger. This clause is further cemented on the basis that the airplane the passenger travels on must be authorised by the relevant regulations to carry such passengers and is flying between established aerodromes.

5. The benefits of a term insurance policy, which has an accidental death rider along with it, will also not be available to beneficiaries if the policy holder dies due to a nuclear reaction or radiation. Death benefits are further unavailable to beneficiaries if the policyholder dies owing to nuclear or chemical composition.

Accidental death riders are immensely helpful if attached along with a regular term insurance plan. Some other riders that can be availed at the time of purchase of a term insurance include riders covering critical illnesses or even hospital care.

It is essential to ask the insurance agent, “does term insurance cover accidental death”, before purchase of a term insurance policy. Additionally, this product offers a free look cancellation policy for 15 days since the time of receipt of the policy by the policyholder. In case enough riders have not been incorporated, it is possible to cancel the insurance plan in its entirety.