Will a Life Insurance Policy Cover You During a War Crisis?

In a war situation, a few important factors will play a key role in determining whether your life insurance policy will cover you or not. These factors include – the nature of overseas stay, residency status applicable for the policy you have taken, the reason for death and the kind of insurance policy you have purchased.

There are no significant exclusions that can prevent a beneficiary from availing of the life insurance coverage benefit in case of a loved one’s demise in a Ukraine-like crisis. Nevertheless, it does not mean an insurance cover will work in all situations.

When will a life insurance coverage depend on your residential status?

Many go abroad temporarily for vacation, business trips, corporate meetings, seminars, medical treatment, exhibitions, personal reasons, etc. On the other hand, many other people go abroad for longer duration as students, consultants, employees, etc. Your life insurance cover remaining effective in a Ukraine-like crisis will depend on the residency status for which you have purchased the policy, nature of overseas stay, reason of death and the type of insurance policy you have purchased.

Residential status has to remain unchanged: Not just resident Indians, even Non-resident Indians (NRIs) buy term plans from Indian life insurance companies. Persons of Indian Origin (PIOs) and NRIs are permitted to invest in term insurance plans offered by Indian based insurers. NRI population comprises parents, spouses, and children of individuals who have shifted abroad for employment purposes. The process of procuring term insurance is nearly similar for both residents and non-residents.

If a policyholder expires having the same residency status as mentioned in the policy, then the insurance cover will stay effective. This mostly occurs in the case of short stays. In the case of a short trip, generally, a natural death gets covered no matter where it occurs.

Reporting the change in residency status in between the policy year: When your residency status changes in the middle of a policy year, you need to inform your insurance company to ensure there are no hindrances in the effectiveness of your life insurance cover.

Personal accidental insurance may not work when a death occurs in a war zone. Invasion, war, and hostilities are generally exclusions in a term plan. You need to check with your life insurance firm in case of a claim.

In most cases, the loss of a dear one, the breadwinner, puts unnecessary financial stress on grieving families. A life insurance policy can ease the financial burden of these families to a great extent.

For any clarifications/feedback on the topic, please contact the writer at bhavana.pn@cleartax.in

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