Ch. 8: Child Plan Exclusions

Imagine you bought a pair of jeans from an e-commerce website. Unfortunately, it doesn't fit you, and you request a refund. The return policy states that returns are accepted only when certain conditions are met, such as intact tags and bills, no damage to jeans, etc. So, if these prerequisites are not met, then the refund/return is denied, right?

In the same way, a child plan provides coverage in various circumstances provided the terms and conditions of the policy are met. The policy documents shall include all of the circumstances covered and not covered by the Child Plan and you must ensure that you are well-aware of them. However, there have been common misinterpretations about Child Plans, and a common misconception when it comes to child plans is that not all types of deaths are covered.

But the truth is that other than deaths resulting from suicide during the first year following the purchase of the policy, all types of deaths are covered by child insurance.

Natural deaths are covered
Child plans cover deaths resulting from existing health conditions. Natural deaths caused by health conditions are also covered. The policy covers serious illnesses like cancer, HIV/AIDS, and other sexually transmitted diseases as well. In the event of your death due to any of the mentioned conditions, the nominee of the policy shall receive the sum assured as a death benefit.

Note: It is mandatory to mention existing health issues while buying a child insurance plan.

Child insurance policies cover deaths caused by natural disasters such as earthquakes, floods, and hurricanes etc. Man-made calamities, such as war, terrorism, etc are also covered by a child insurance policy.

Note: War-related deaths may not be covered by riders.

Child plans cover deaths resulting from activities such as skydiving, kayaking, whitewater rafting, etc.

Note: Deaths that happen as a consequence of partaking in adventure sports may not be covered by the riders you have chosen.

For example, Raj bought a 15 lakh child insurance policy and a 10 lakh accidental death benefit rider for his son. He dies in a kayaking accident while the policy is still in effect. Although the child plan covers such accidents, the add-on rider does not cover deaths caused by participating in adventurous activities. Now, his son shall get a claim amount of Rs 15 lakhs but not the 10 lakhs rider benefit.

Accidental death is covered by the child plan regardless of the location of the accident, whether it occurs at road, home or in a public area.

For example, Maneesh bought a 20 lakh child insurance policy for his son. Unfortunately, Maneesh meets with an accident on his way to work and dies on the spot. His family shall receive the sum assured of Rs 20 lakh as a death benefit.

Child plans cover death resulting from involvement in illegal actions or crimes.

Note: Riders may not cover deaths that occur as a result of unlawful actions.

Child plan covers death resulting from consuming alcohol, drugs, or narcotics.

Note: Alcohol/drug-related fatalities may not be covered by riders.

Besides the types of death mentioned above, child insurance policies typically cover several other types of death as well. Exclusions need to be disclosed in the policy document by the insurer.

Point To Remember: You shouldn't infer anything differently if your policy doesn't clearly specify that it won't cover a specific type of death. Before making a purchase, double-check the policy wordings.

Insurance agencies can refuse to pay a claim only if it fits within this criterion, that is, death due to suicide. It is not covered within the first year of policy duration.

No claim shall be granted if a death occurs due to suicide within 12 months of the policy term. In that case, the insurance company will pay all premiums paid to date or the surrender value of the policy, whichever is higher, provided the policy is active.

Note: Death by suicide is covered from the second year of a policy.

Hence, all kinds of deaths are covered under a child plan except suicide. Nevertheless, some add-ons, such as riders, etc., may not be applicable in certain circumstances. It is imperative to read the policy wordings to ensure you know what it covers and what it does not. Choose the one that fits your needs.