How to avoid rejection of insurance claim

In a world of uncertainties, term insurance provides a safety net for families suffering in the unfortunate event of the demise of their breadwinner. But have you ever wondered what will happen if your term insurance claim gets rejected due to some reason?

One can shudder at the thought of rejected term insurance. This is because, after the death of the policyholder, their family is left in a state of shock, if it was assumed that the money would flow in, otherwise not. The loss of their earner cuts deep into their financial position. Such an incident leaves the family clueless and in dire need of stability and financial security.

To avoid adding misery to an already unfavorable time, it is essential to know what may lead to a claim being rejected.

lack of transparency
While filling in your information for a term insurance policy, it is extremely important to honestly disclose all the required information to the insurers.

This is important because a term-insurance policy is a means of securing your family’s future, and helps your insurer better protect you.

By hiding important facts from the insurance company, people only give bigger reason for rejection.

However, this situation can be avoided by ensuring that you provide accurate and correct information regarding factors such as age, occupation, income and existing policy details.

While selecting a new policy it is necessary to provide details about the pre-existing conditions as these details come up sooner or later anyway.

unknown option
Hence, it is best to be clear about such situations while signing up for the policy. This not only strengthens your case but also helps your insurer to process your request without any disruption.

An insured’s lifestyle choices directly affect how much premium they will pay for their life insurance.
 
These include unhealthy eating or other lifestyle choices such as smoking, drinking alcohol and the like.

Data from the World Health Organization shows that India is home to 12% of the world’s smokers, with tobacco-related diseases killing more than 1 million people annually. Insurers offering term life insurance approve the policy and fix the premium amount based on various lifestyle and health factors. Such habits must be informed to the insurer while applying for term insurance.

Also, people with hazardous hobbies like paragliding and deep-sea diving need to mention this to their insurers while applying for a term plan.

Doing so will help the insurance company to better assess your case and determine the best premium amount for you.

handing over paperwork
There are two parts to taking a term plan. The first involves research to find a suitable plan. The second part requires careful study of the documents and understanding the terms and conditions of the policy.

Usually, by the time people finalize the policy after thorough research, they are too tired to know about any more details. So they hand over the paperwork to the agents.

However, it is not advisable to entrust the responsibility of filling and submitting the insurance form to a third person.

Since the financial future of our loved ones directly depends on it, it is our responsibility to be careful in these matters. Missing any important details in these forms and documents such as family medical history can cause problems later.

pre-existing policies
It is a common mistake for people to ignore the policy declaration rule which dictates that they should disclose their existing policies to the new insurer.

Many buyers are not aware of this. Be sure to inform your insurer about your sum insured, no matter how small or large. Failing to do so will definitely result in your claim being rejected.

During the claims process, the column containing your medical history is taken into consideration.

This is very important as it is directly related to your overall health graph and has a huge impact on the acceptance or rejection of your claim. As an important part of the proposal form, this section covers the medical conditions of the proposer and their family.

This is what helps the insurer to decide the amount of premium and whether the policy can be issued or not.

nature of profession
While people from all walks of life can opt for a term insurance policy, some occupations carry high risk which is on the threshold of ‘life threatening’.

People with jobs that require mine work and firefighters are part of this category. It is best to mention the nature of such jobs to your insurer to avoid further problems.

At the time of claim, if an insurer believes that such information was hidden from them at the time of sign up, the claim may be rejected.

A policy terminates when it loses its validity on paper – either because the term has expired or because premiums were not paid within the time limit.

Filing a claim for a lapsed policy is a meaningless exercise that will get you nothing. In other words, any claim raised by you with the lapsed policy will be rejected.

‘Due date is important’

Periodic premiums are required to be paid on or before the due date to maintain the validity of your term plan.However, if a policyholder fails to pay the premium on time, insurance companies provide a grace period of a few days.But it should be remembered that no claim will be paid if the policy is not renewed within the grace period. Therefore, it is necessary to take utmost care against policy lapses to protect against any untoward incident.

 (The author is Head of Term Life Insurance, Policybazaar.com)