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Ever wondered what would happen if your term insurance claims get rejected? There would be grief of losing a family member and an unfading stress for upcoming financial liabilities. Such experience disturbs the idea of buying a term insurance plan; financial security for our dear ones. Some of the most common reasons to reject the claim is mis-information in the plan documents, policy lapse due to non-payment of term insurance premiums and false medical reports when buying term plan etc. To avoid such cases, you should be aware of all the points that should be kept in mind when filling a term insurance plan form. Let’s understand the term insurance claim rejection reasons in detail:
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The following points are some of the main term insurance claim rejection reasons:
Clients often hand over a blank check and proposal form to an advisor, trusting them to fill in the details. However, no matter how trustworthy the agent may be, they cannot fully understand your health history, financial situation, or family. It’s important to take responsibility and complete the term insurance application yourself. Doing so ensures accuracy and helps you better understand the life insurance policy and select the features that best meet your family’s needs.
Providing inaccurate information on your life insurance application can have serious consequences for your life insurance claims. It's crucial to carefully and accurately fill in details like age, income, occupation, education, lifestyle habits (such as smoking and drinking), as well as information regarding prior policies and claims, if applicable. These factors significantly impact your premium. Any errors or omissions in this data can be considered fraudulent and result in the forfeiture of policy benefits.
Therefore, you must provide all the correct and exact information about your existing insurance policy details to avoid term insurance claim rejected in future.
Financial benefits are paid to the beneficiary/nominee upon the death of the life assured. Therefore, it is important to keep the insurer updated with the nominee’s details, such as contact information, address, etc. Clients often hand over a blank check and proposal form to an advisor, trusting them to fill in the details.
However, no matter how trustworthy the agent may be, they cannot fully understand your health history, financial situation, or family. It’s important to take responsibility and complete the term insurance application yourself. Doing so ensures accuracy and helps you better understand the policy and select the features that best meet your family’s needs.
There are jobs that carry no risks, but then there are also jobs that are high risk or are life threatening. Jobs like working in a mine, fire fighting, etc. involve high risks. The nature of jobs must be communicated to the insurer before you buy term insurance plan. The insurer may reject your term insurance claim if the job type is not accurately conveyed.
One of the most common reasons for rejection of term insurance claims is the non-disclosure of the medical history of the family. Ensure that you give out all the necessary facts regarding your and your family's medical history. It is also important to disclose the conditions that may have affected your family members in the past like, cancer, diabetes, or any other serious conditions.
The life insurance companies in India request a medical test for accurate condition of the life assured. This promotes transparency and ensures that the insurer is aware of all the pre-existing conditions of the life assured. Here, you should also mention all of your habits that affect your longevity, such as the consumption of alcohol and tobacco. Be very clear in declaring these details to avoid term insurance claim rejected.
Claims are settled only for active insurance policies. If you miss paying the premium, the policy will lapse after the grace period, typically up to 30 days for annual premium policies. The insurer will pay the claims if the policyholder dies during the grace period. Not only that, insurance companies also offer a chance to revive lapsed life insurance policies within the revival period, allowing policyholders to get continued coverage within the same plan.
When this happens, all previously paid premiums are forfeited. Consider setting up direct debit facilities to avoid this to ensure timely payments. If a policy lapses, you can attempt to revive it by paying the required fees. Securing your family’s future is worth the effort.
Note: It is suggested to calculate the term plan premium on the term insurance calculator online tool by Policybazaar before buying the plan.
A lot of people who buy more than one insurance policies unaware of the necessary policy declaration rule, they need to disclose their existing policies to the new company. However, it is absolutely necessary to declare your prior insurance policies. Regardless of how much your policy sum assured is, you have to disclose your previous policies before taking a new life insurance policy (This means Term plan, ULIPs with insurance cover, and Traditional Policies). Not disclosing information about pre-existing life insurance plans can lead to term insurance claim rejection in the long run.
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Here is a list of ways on how to avoid term insurance claim rejection:
Disclose all the Information Carefully and Correctly: This means you need to provide all the documents and information on the policy form accurately to the best of your knowledge. Lying while applying for a policy can be a reason why term insurance claim is rejected.
Provide Updated Personal and Family Medical History: You need to provide all the information regarding any pre-existing illnesses or conditions that may run in the family, along with supporting documents. This is to avoid your term insurance claim rejected.
Fill out the Proposal Form Yourself: This allows you to make sure all the information you fill in on the proposal form is correct to the best of your knowledge. Letting your agent fill out the form might make mistakes.
Pay Premiums on Time and Avoid Policy Lapse: Pay all your term insurance premiums on time to ensure your policy does not lapse. A lapsed term insurance policy is one of the term insurance claim rejection reasons.
Regularly Updating the Nominee Details: You should not only make sure that you responsibly appoint the appropriate nominee for your term insurance policy, but also ensure that the updated details like name, contact number, and email IDs, are also updated in your policy. This ensures that the insurer is able to verify the right nominee and avoid any reasons for rejection of term insurance claims.
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It's better to be safe than sorry. You should be very honest and transparent while signing up for term insurance, especially when filling out out the proposal form. You need to disclose the important details to avoid getting in huge trouble. Don't let your efforts and money go to waste. Be vigilant while buying term insurance, and give out as many details as possible. Be secured and assured!
Note: Check out the best term insurance plan in India and choose one that suits your requirements.
†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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