Ukraine crisis: Does your Indian life insurance policy cover you if stuck in war abroad?

Hundreds of civilian casualties, including the lives of two Indians, have already been reported in the Ukraine-Russia war. One question which many people having life insurance policy from an Indian insurance company would want to know is whether their policies will work if an insured person dies in such a situation.

"Life insurance policies cover deaths irrespective of the location. Hence, deaths caused due to Ukraine like crisis or any other situations are covered under life insurance," says Abhishek Misra, CEO & Principal officer of Bonanza Insurance.

The only exclusion, which a term plan typically has, is in the case of suicide by the policyholder, that too in the first year of the policy. For instance the Tech Term Plan by LIC states "This policy shall be void if the Life Assured (whether sane or insane) commits suicide at any time within 12 months from the date of commencement of risk, provided the policy is inforce or within 12 months from the date of revival, the Corporation will not entertain any claim except for 80% of the premiums paid (excluding any extra amount if charged under the policy due to underwriting decisions and rider premiums, if any) till the date of death."

So that means that there are no other major exclusions which can prevent the beneficiaries from getting the life insurance cover benefit in case of death of their loved one in a Ukraine-like crisis. However, that does not mean that cover will work in all situations.

When a life insurance cover depends on residential status
Many people go abroad on temporarily such as on vacation, business trip, meetings, seminars, exhibitions, medical treatment, to meet relatives and so on. While many other people go for longer stay such as students, employees, consultants and so on. Whether your life insurance cover will remain effective in a Ukraine-like crisis will depend upon the residency status for which the policy is taken, nature of overseas stay, cause of death and type of insurance policy that you have purchased.

Residential status should remain unchanged: Term plans from Indian life insurance companies are not only purchased by resident Indians but also NRIs. "Non-resident Indians (NRIs) and Persons of Indian Origin (PIOs) are allowed to invest in term insurance plans offered by India based insurers. The NRI population also includes spouses, parents and children of those individuals who have moved abroad to seek employment. The process involved in purchasing term insurance is nearly similar for both residents and non-residents," says Rakesh Goyal, Director, Probus Insurance.

If the policyholder dies with the same residency status as stated in the policy, then the insurance cover will remain effective. This happens mostly in case of short stays. "For a short trip, a natural death is generally covered irrespective of where it occurs," says Goyal.

Change in residency status during a policy year to be reported: If there is change in your residency status in the middle of a policy year then you have to inform the insurance company to make sure that there are no impediments in effectiveness of your life insurance cover. "It may so happen that you purchase a term insurance cover as an Indian citizen but are required to move abroad due to employment or other reasons during your policy term. In such cases policyholders needs to inform the insurer regarding the plan of settling in a foreign country," says Goyal.

Personal accidental life cover may not work
If the death happens in a war zone, then the personal accidental insurance may not work. "War, invasion and hostilities are typically the exclusions in a term plan, and one needs to check with their life insurance company in case of a claim," says Goyal.

For instance, LIC's Tech Term policy has a clause that allows it not to pay for additional personal accident cover taken with the term plan if the case of death involves war. The Tech Term Plan of LIC states "The Corporation shall not be liable to pay the additional sum referred above (Personal Accident), if the death of the Life Assured shall: be caused by injuries resulting from taking any part in riots, civil commotion, rebellion, war (whether war be declared or not), invasion, hunting, mountaineering, steeple chasing, racing of any kind, paragliding or parachuting, taking part in adventurous sports".

So, if a policy holder has taken such a term plan with personal accidental rider to double the sum insured in case of death by accident, then the insurance company will only pay for the term insurance cover part and not for the additional sum insured against the personal accident insurance rider.

Many parts of the world such as Iraq, Kuwait, Afghanistan, Syria, Libya, Yemen and many African countries remain under continuous turmoil. Unwillingly many Indians are often caught in the middle of such crisis. The loss of a loved one, in many cases the breadwinner, puts unwanted financial stress on the already grieving families. One's life insurance policy can lift the burden off of these families somewhat as it can be a source of major financial support for the beneficiaries.