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Buying a term policy is just the first step. Proper estate planning, communication, and timely action are crucial. Claims should be settled within 30 days to avoid rejection.
Insurance.
Does the responsibility of ensuring financial safety end with buying a term policy? Contrary to the popular notion, it does not. While purchase decision is the obvious, crucial first step, the process of planning how your assets will be managed in your absence (or estate planning), is equally important. But this is not so straightforward. Death, despite being inevitable, is not something that is talked about in families. Often, nominees are not aware of the details or policyholders themselves act ignorantly.
The time to file a claim will mostly come unannounced and if it does, nominees often find themselves left in the lurch, unsure what to do next. Although the companies have a smooth and convenient approach to claims, it’s important to know the process. On top of the emotional despair at the time of a sudden death, one shouldn’t have to get tangled in confusion about claims.
While term life insurance provides a financial safety net for your family, one must be aware of the finer details. Proper planning, communication and timely action can ease the process during difficult times and ensure that your loved ones are protected.
Communicate to the insurer
The insurer should know about the policyholder’s death as soon as possible. Prior to this, beneficiaries should also make sure that the past premiums are paid and the policy is active. They should also download the claim form online or get it from the nearest branch and fill in the details. The form should be submitted along with the supporting documents.
Submit forms with supporting documents
The nominee(s) need to submit the form along with the relevant documents so that the claim process can be started. Following are the documents needed to be submitted:
- Document for age proof
- Death certificate
- Any medical documents (if required) related to the policyholder’s demise
- Nominee’s identity proof document
- Original copy of the policy documents (There may be exceptional cases, like casualty or accident at a large scale where one can ask the insurance company to send a duplicate policy copy)
Evaluation of claim
The next process is the evaluation of the claim wherein the insurer examines the details before issuing the payout. The insurance company will perform their checks and might need additional details like medical or legal documents. They might want to look into the cause of the death and rule out the possibility of any exclusion. This is more common for murder or suicide cases.
Settlement of claim within 30 days
To ease the burden of beneficiaries, the Insurance Regulatory and Development Authority of India (IRDAI) has directed to settle claims within 30 days of filing. This period begins from the moment all documents are submitted to the insurer and the assessment is completed on their end. If the claim is not settled within the required period, the insurance company will be accountable to pay the interest penalty.
Common reasons for claim rejection
While term insurance provides a safety shield for your family, there are a few common reasons for claim rejection that you should be aware of when purchasing the policy. It’s pertinent for nominees to keep these points in mind when filing a claim.
Always being transparent and communicating honestly is essential when purchasing the policy and submitting any forms. Failing to provide accurate or complete information is one of the primary reasons for claim rejection.
Always keep in mind to disclose any pre-existing term policies as this can impact claims. Also make sure to reveal any pre-existing health conditions that directly affect your premium and coverage. Failure to reveal those conditions can lead to claim rejection.
Disclose any lifestyle choices like smoking or extreme sports as they can impact your health which the insurer needs to know. Any activities that could jeopardize your life should also be disclosed, as the insurer will evaluate your coverage based on this information.
Term insurance provides coverage against suicide if it occurs more than 12 months after the policy is issued or revived. If the death occurs within this period, the nominee may not receive the full death benefit.
Any lapses due to missed premium payments will also result in a non-payment of claims, so it’s important to ensure premium payments are up to date to avoid a policy lapse.
This is authored by Rhishabh Garg, Head, Term Insurance, Policybazaar.com
The views expressed in this article are those of the author and do not represent the stand of this publication.
