Factors that affect your life insurance claims

  • Life Insurance Articles

Why do we buy a life insurance policy?

1) To protect our families in case of death

2) To get financial protection in case of an accident, disability or any critical illness

3) To help our family pay off any obligation in our absence

At a time when the family is suffering from a grave emotional loss, the last thing they need to worry about is money. That’s why life insurance claims can be very helpful at such times.

However, a few small mistakes can lead to a rejection. This is when the insurance company refuses to pay the claim money. Typically, these can be because of the below issues:

1. Documentation issues

Imagine sitting down and sorting financial papers on a Sunday instead of resting. Does not sound nice, right? It’s no surprise then that a lot of financial paperwork and documents remain outdated. Take this scenario, for example, Abhay purchased a policy at the age of 25 and appointed his mother as the nominee. 35 years later, his late mother continues to be the nominee. How will the life insurance company give her the money? In such cases, there’s an extra procedure where an ‘Succession Certificate/Legal Heir Certificate’ needs to be submitted.

Similarly, there can be a lot of issues with documentation. Both with respect to the policy details as well as the claim details. It’s important to be very careful with every paper you submit.

2. Not covered in the policy

Life insurance plans have exclusions. For example, the death in a war zone, or due to suicide or an adventurous activity are typically not covered by many life insurance policies. In such a case, the claim can be rejected.

Sometimes, certain scenarios have a waiting period too. For example, death due to pre-existing illnesses may be covered after a fixed period—say a year or two. During this time, claims will not be accepted.

So, you should check the exclusion list in your life insurance policy. It may help to get the insurance riders too to reduce the exclusion list.

3. Wrong information

In certain cases, the insurance company might investigate the reason for death. This especially happens in cases of an early death within the first 3 years of the policy or any suspicious claim. The insurer may find out that certain details or information submitted when buying the policy were incorrect. Or, the insurer may find that certain information was withheld, like smoking habits, past medical history etc.. . In such cases, claims can be rejected. Hence, all details provided in the application form should be accurate and complete.

4. Premium payment issues

Life insurance policies are typically renewed every year. There is clear due date for premium payment. After this due date, the insurer gives you a grace period . If the premium is paid within this grace period , then the policy continues. Otherwise, the policy can get lapsed. If you pay after the grace period , it’s equivalent to buying a new policy. All the waiting periods or bonuses accrued can be reset.

These are the factors that affect your life insurance claims. Know these factors so that when there is a claim, you know what to expect.

Knowledge is a powerful thing. Don’t you think so?

Also read:

All you need to know about claims

Get to Know About Benefits of Critical Illness Insurance Plan

What is Cashless Hospitalisation

Learn insurance basics

ADV/3/20-21/2429

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