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Life insurance claims are the benefits the nominee can claim in case of the policyholder’s death during the policy term. The approval of these claims is essential as it ensures your family's financial stability in the event of your unfortunate demise. But if the insurance company rejects your life insurance claim, your family will be financially vulnerable.
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However, if your claim is rejected, the insurance company must give you the reasons for rejection. You can find out why your claim was refused. Insurance companies are required by the IRDA to give reasons for rejecting a claim and the number of claims rejected.
Let us look at why life insurance claims may be rejected in India and how to avoid them.
The complaint and response letter of the life or term insurance company can be used to find out the reasons why your claim has been refused. More straightforward disputes may be resolved, or incorrect decisions may be overturned when the matter is considered from a fresh perspective. You may also be given a more detailed explanation of the reasons behind the original decision and understand why the claim had been rejected.
Here is a list of top reasons for life insurance claim rejection in India:
Policy Lapsation: Premiums are to be paid on important, timely premium payments that will help your policy remain active and cover the policyholder. Most Insurance companies do provide a grace period of 15 or 30 days, depending on their preferred mode of premium payment.
Insufficient Conditions: Understanding what is term life policy is essential as it can help avoid insurance claim rejection. Generally, insurers refuse claims due to the policyholder not fulfilling the legal conditions.
Suicide Clause: In certain cases, the insurer or company will refuse to pay the insurance amount. This mainly happens in cases where suicide within a specified period is an exclusion under the life insurance. The insurer may refuse to repay the life insurance claim on the suicide of the life assured within a specified period, generally 1 year.
Proper Nominee Details: Proper documentation is one of the primary reasons that an insurance claim could be rejected. The following points should be covered & all paperwork should be duly made in writing and duly signed by the nominee,
Name of the insured
Policy number
Date of death
Cause of death
False or non-disclosure of Information: Violation of good faith, insurance companies enter into long-term contracts with their clients. Hence, accurate data regarding age, health, financial conditions and other aspects must be provided when filling out the policy forms.
Term Plans
In case of a claim rejected by the insurance company, the insurer needs to provide a valid reason for it. However, there is a list of things the nominee can do to ensure claim settlement. To begin with, one has to follow a set of procedures. First and foremost, get the death certificate of the insured as early as possible and provide it to the insurer. Call your insurance representative and ask for his assistance to get all necessary documents filled out accurately. Your agent can act as an intermediary between you and the company. In case you don’t have an agent contact the insurance company directly. Submit a certified copy of the death certificate to your insurance company. Once this is done, a settlement is issued shortly.
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If you or someone you care about has life insurance, there are a few things to do to make sure everything goes smoothly when the time comes to claim it:
Set up automatic payments so you don't miss a payment and lose your coverage.
When you get the insurance, be completely honest about your health and hobbies. Don't hide anything.
Keep your policy info up to date. After big life changes, update who gets the money and make sure their contact info is right.
Tell your beneficiaries that you have life insurance, show them where to find the paperwork, and explain how they can claim the money.
A life insurance claim rejection can impact not only the policyholder’s life but the nominee’s life as well. In case of a maturity claim rejection, the policyholder can lose their retirement money, whereas, in case of a death claim rejection, the family may financially suffer in the absence of the policyholder. Therefore, it is important that you avoid all the reasons for life insurance claim rejection and are aware of what to do in case your life claim is rejected.
†Policybazaar does not endorse, rate or recommend any particular insurer or insurance product offered by any insurer. This list of plans listed here comprise of insurance products offered by all the insurance partners of Policybazaar. For a complete list of insurers in India refer to the Insurance Regulatory and Development Authority of India website, www.irdai.gov.in
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