When it comes to the substantial misrepresentation clause, which states that if you willingly hide information from your insurance company regarding your lifestyle or health habits, your claim may be refused, the significance of being honest with your insurance company cannot be overstated. This might include lying about having a dangerous profession, having a pre-existing health condition, participating in extreme sports, or being addicted to alcohol, smoking, or narcotics.
A suicide clause is one of the most common exceptions to payout in practically all term insurance plans, which indicates that if the policyholder commits suicide within the timeframe provided, the nominee is only entitled to the policy’s premiums and not the death benefit. These provisions may differ from policy to policy, so be sure to read them carefully before buying life insurance.
2. Natural disasters resulting in death.
Natural calamities such as earthquakes, floods, and other natural disasters do not qualify a policyholder for a claim. You must be aware of the situation and inform the beneficiary. If the nominee attempts to file a claim in this situation, it will almost certainly be denied.
3. Terrorist Attacks Cause Death
If an insured person dies as a result of a terrorist incident, the beneficiary is not entitled to compensation. Though a policyholder cannot guarantee against such death, he or she can always remain vigilant.
4. Death as a result of an unspoken habit or disease
You must tell the insurer all there is to know about your life and habits. If this information eventually turns out to be the cause of the policyholder’s death, the beneficiaries’ claim will almost certainly be denied. Any serious ailment, such as diabetes, must also be disclosed.
5. On the application, lying
If you misrepresent your application, life insurance companies can refuse to pay out death benefits. This is also considered insurance fraud.
If you lie about any of the following, for example, Family, Medical conditions, Alcohol, and drug use, health history, Travel plans the insurer can terminate your coverage and your beneficiaries will lose benefits.
6. Participating in Risky Activities
If you Work as a logger, pilot, offshore oil rig worker, offshore fisherman, or underground miner all fall under the risky activities category.
You can still get a life insurance policy if you engage in risky activities for leisure or work, but your rates for the same may be higher. Your insurer may also add an exclusion to the policy, depending on how risky the behavior is.
If your beneficiary murders you or is indirectly connected to your murder, they will not get the death benefit under the “Slayer Rule.” Rather, your insurer will distribute the death benefit to your contingent beneficiaries or estate.
8. Not designating a recipient (or they predecease you)
Designating primary and dependent beneficiaries to receive the insurance death benefit in the case of your untimely death is critical. If you don’t have any chosen beneficiaries or if you have and they predecease you the death benefit payout becomes complex. In certain cases, the death benefit is paid to your estate rather than to your loved ones.
9. Death in a Foreign Country
Term insurance does not cover fatalities that occur while the insured is traveling outside of the nation. If you are ill, you should avoid traveling internationally. However, traveling may be inevitable at times since some therapies are only available at specialist hospitals that may be situated abroad. Insureds must be aware that if they die in a foreign country, their beneficiaries would be denied any claims.
10. Death occurs within the first two years of the policy’s existence.
Any type of term life insurance policy, if the policyholder dies within the first two years of purchasing the insurance, the claim is examined for fraud, then under Section 45 of the Insurance Act,  1938 including incorrect disclosure or even deception.
The IRDAI mandates that if a policyholder who is purchasing the insurance is claiming for the above reasons, the nominee shall does not get the whole amount of the policy (linked plans). These terms differ from policy to policy, and when purchasing life insurance, be sure to look through these tiny details to ensure that you completely comprehend the coverage you are purchasing.
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