What Kind of Deaths are Not Covered in a Term Plan?

Quick Overview

Most term plans in India cover nearly every kind of death, whether due to natural disasters, illness, accidents, pandemics, or even unusual cases, given that your policy is active.

However, term plans generally have a standard set of exclusions, such as suicide in the first policy year. Similarly, deaths linked to substance abuse, participation in illegal activities, or situations where the nominee is involved in the policyholder’s death can lead to claim denial. And if the policyholder hides important health or lifestyle information at the time of purchase, the same can also lead to claim rejection.

Wondering what types of death are covered under your term insurance? Some situations are covered, others are not, and knowing the difference helps you avoid surprises later. This guide breaks it down in simple, clear terms so you know exactly what to expect.

What Kind of Deaths Are Not Covered in a Term Insurance Plan?

Not all deaths guarantee a payout from your term insurance policy. Here are the types of death excluded in term insurance:

Suicide Within the First Policy Year

This is one of the most common exclusions. Term insurance does cover suicidal death, but only after 12 months from the date of policy purchase/renewal. If the policyholder dies by suicide within the first year of buying or reviving the policy, the insurer will reject the claim and refund around 80% of the first-year premium.

Here’s a snippet from the IRDAI master circular regarding the suicide exclusion within 12 months of policy purchase :

What Kind of Deaths Are Not Covered in a Term Insurance Plan?

Death Due to Participation in Hazardous or Extreme Sports

If the policyholder dies while doing high-risk activities like paragliding, rock climbing, or deep-sea diving, the insurer may reject the claim if such hobbies/profession is not declared while buying.

This is more likely if these activities are regular hobbies or part of their profession, and the policy lists them as exclusions.

Death Due to Intoxication or Substance Abuse

Deaths caused by drug overdose or substance abuse are usually not covered. If your term policy excludes alcohol or narcotic use, any claim for death from these causes will be denied.

Death While Committing a Criminal Act

If the insured dies while involved in an illegal activity, like theft, assault, or evading the police, the insurer has the right to deny the claim.

In general, traffic violations like not wearing helmets/ seat belts, etc, are not considered reasons for claim rejections.

Death Due to Self-inflicted Injuries

If death happens due to intentional self-harm that is not counted as suicide, the claim may be denied. Insurers look closely at intent and policy terms, especially if you opt for rider benefits like accidental death cover with your base cover.

Claims teams review medical reports, police records, witness statements, and hospital notes to understand whether the harm was intentional or truly an accidental.

Quick Note

If someone intentionally injures themselves (like a self-inflicted burn or overdose of medications) but does not intend to die, yet the injury leads to complications and eventual death, it may not be classified as suicide. However, it is still considered intentional self-harm, so the insurer can reject the claim.

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Death Due to Pre-existing Diseases/Medical History not Disclosed

If someone knowingly hides major health issues or habits like smoking while buying the policy, the insurer can reject the claim even after many years. The moratorium (Section 45) rule protects only honest buyers, not intentional fraud.

If evidence shows the policyholder hid important facts on purpose, the claim can still be denied. This highlights the need to give accurate information right from the start to avoid problems later.

Example of Claim Denial

A 35-year-old applicant had a history of early-stage breast cancer but chose not to disclose it while buying a term plan. Seven years later, the person passed away due to a recurrence.

During claim assessment, the insurer found the past medical records. Because the omission was intentional, the moratorium rule did not apply, and the insurer legally rejected the claim for deliberate non-disclosure.

Bottom Line: Always disclose past illnesses. Hiding medical history can void the moratorium protection and lead to a denied claim.

Death Due to Involvement in Causing War, Civil Unrest, or Terrorism

Some term plans exclude deaths caused by war, terrorism, or civil unrest if the insured person was involved in causing the event. While most policies include such coverage if the life assured is the victim, it’s best to check the fine print.

Note: According to recent reports, many Indian insurers cover deaths caused by war or terror attacks, but this applies only when the insured is a civilian and not involved in the conflict.

Homicide (if Nominee is Under Investigation)

If the policyholder is murdered and the nominee is a suspect, the insurer will pause the claim until the investigation is complete.

If the nominee is found guilty or involved in the murder to obtain the payout, the claim will be rejected, and no benefit will be paid. The death benefit amount would go to other legal heirs instead.

Example of Claim Denial

If a policyholder dies suspiciously and the nominee is a close relative, the insurer pauses the claim during the investigation. If the nominee is found to have been involved in the death to gain the payout, the claim is rejected.

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Ditto’s Take on Policy Exclusions

Always go through the terms and conditions carefully before buying a term plan. If anything feels unclear, speak to your insurer or advisor. Understanding these rules up front helps you avoid surprises later and choose a plan that truly protects your family.

Still unsure about purchasing a term plan? Book a free call with us and let our experts guide you to make an informed decision.

Frequently Asked Questions

Does term insurance cover natural death?

Yes, term insurance covers natural deaths such as those caused by illness or age-related conditions.

Does term life insurance cover cancer death?

Yes, death due to cancer is covered, as long as the illness was diagnosed post-policy issuance.

Does term insurance cover death if the policy has ended or lapsed?

No. A term plan pays only if death occurs during the active policy term. If the policy has expired or lapsed due to unpaid premiums (after the grace period), coverage stops, and no payout is made.

Does term insurance cover death due to COVID-19?

Yes, term insurance policies cover death due to COVID-19. If any other pandemic arises in the future, IRDAI will step in and make sure those deaths are covered as well, just like it did for COVID.

If I die abroad, will term insurance cover it?

Yes, most term plans cover death abroad as long as you disclose your international travel or residence during purchase/renewal. As long as the country is not part of the insurer’s territorial exclusions and your disclosures are complete, your family can file the claim normally with documents like the death certificate, medical records and embassy/local authority reports.

Last updated on: 13 Dec, 2025