How To Handle Term Insurance Denials: A Step-By-Step Guide?

Dealing with a term insurance claim denial can be a stressful and confusing experience. Toughie, right? Hence, it is of paramount importance to know how to deal with this situation effectively to protect your rights and make sure you receive the benefits you are entitled to.

Take, for instance, Kavita, a young mother who recently lost her husband named Bhuvan. Bhuvan had a term life insurance policy, which Kavita thought would provide financial security for her and their children. When Bhuvan passed away, Kavita filed a claim with the insurance company, expecting to receive the payout as planned.

But then, the unthinkable happened!

The insurance company denied her claim because there was some error in the application! Imagine how that error turned out to be a blunder in their lives.

Like any other being in this situation, Kavita was left devastated and confused. She didn't understand why the claim was denied and didn't know what to do next as she was unaware of most of the policy details.

Legal jargon and complex processes were clouding her thoughts. But what could she do next?

Don’t Panic ! This article is going to address all such questions and help people like Kavita navigate through the difficult process of a term insurance claim denial.

What Is Term Insurance?

Can you build a solid 20-storey building without laying a solid foundation first? No, right? Here, also the story doesn’t differ. Before getting into the term insurance denials we need to get our basics right, i.e. understand term insurance. In simple words, term insurance is a simple and effective way to secure your family's financial future in your absence. So, say if you pass away while the policy is active, then the insurance company provides a sum of money, called sum assured to your family, given the conditions are fulfilled.

Let’s talk about the sum assured a bit-

Sum assured is the amount that replaces your regular income, which is useful in ensuring your family’s financial requirements are met without compromising their dreams and lifestyle.

Your family will receive this money according to the claim payout option you choose when you are purchasing the policy. It is important to note that term insurance is purely a risk cover, which means if you survive until the very end of the policy’s duration, no benefits will be paid to you. It is the simplest and most affordable kind of life insurance. It offers you a reliable income replacement and secures your family’s needs, allowing them to maintain their dreams and lifestyle, even in your absence.

Unfortunately, as in Kavita's case, term insurance claim denials can happen, leaving families lost and confused. But we are here with some tips for handling term insurance denials to help you sail smoothly in this challenging situation.

Let’s get started on then-

Tips For Handling Term Insurance Denials

1. Understand The Reason For Denial:
The first step here is to navigate through the denial is to carefully read the denial letter from the insurance company. This will explain why your claim was rejected. The most common reasons include:

• Non-disclosure of medical history: It is of utmost importance to disclose all your medical history with the insurer. If you miss any information out, which can happen by mistake or on purpose, your claim could be denied. Make sure your nominee knows what information the insurer considers "material."

• Inaccurate information on the application: Your nominee should always double-check details such as income, occupation, and lifestyle habits if they were accurately reported.

• Death due to policy or rider exclusion: Suicide within one year of purchasing the policy is typically not covered. Additionally, certain activities or events may also not be covered under any additional riders you've included in the policy. Make sure your nominee knows these details before filing the claim.

• Late claim submission: Lastly, there could be specific time limits for raising a claim. Always adhere to such deadlines to expect a smooth claim process.

2. Review Policy Documents:
Once your nominee has understood why the claim was denied, they should now move to review all the policy documents again. This would include checking for information about exclusions, how to file claims and the process for appealing the decision. This will guide them in figuring out what to do next.

3. Gather Supporting Documents:
Now, if your nominee thinks the denial is unjust, it's crucial to gather evidence to support their case. This would include collecting documents like medical records, communication slips with the insurer, or proof of income.

4. File An Appeal:
It is very important to note that many insurance companies provide a formal appeal process for your nominee. To start with the appeal process, they would have to follow the procedures outlined in the policy documents. This step involves submitting a written request for reconsideration along with the necessary supporting documents.

5. Persistent And Professional:
The appeals process might get time-consuming for your nominee. But it's important for your nominee to maintain clear and professional communication with the insurance company. If they do not receive a response within a reasonable period, they should feel confident in following up on their appeal.

6. Consider Seeking Help:
Be it Kavita or your nominee, the process of going through a term insurance denial can get overwhelming. Here, they should consider getting help from an insurance agent or a lawyer who knows about these insurance claims. These professionals can actually guide and speak up for your nominee and make it easier for them to navigate legal jargon.

Summing Up!

Unfortunately, even with the best intentions, term insurance claims can be rejected due to varied reasons. Common reasons include non-disclosure of medical history, inaccurate information on the application, death due to policy exclusions, or late claim submission. But a denial doesn't necessarily mean the end of the road. By understanding the reason for the denial, reviewing the policy documents, gathering supporting documents, and following the appeals process outlined by the insurer, one can improve their odds of a successful claim.