Top Reasons Why A Term Insurance Claim Might Get Rejected

In the journey of life, our utmost concern lies in safeguarding the financial well-being of our loved ones. But in a world full of uncertainties, it is essential to acknowledge the possibility that we may pass away. If such a scenario were to unfold, who would look after your family, particularly if you are the sole breadwinner?

The answer is term insurance! In such situations, a term insurance plan emerges as an unwavering ally, extending its financial support to your loved ones during these dark and uncertain times. It not only offers financial security but also peace of mind, ensuring a bright future for those who matter the most.

However, amidst the significance and reassurance offered by term insurance, there exists an unfortunate reality that could be challenging for your loved ones - claim rejections. These rejections can shatter the very foundation of the security that term insurance promises, leaving them vulnerable and unsupported during their most challenging times.

Therefore, it is essential to understand the reasons behind term insurance claim rejections. By gaining insight into the potential pitfalls, you can take appropriate measures to ensure that your loved ones do not face an unexpected denial of financial support when they need it the most.

In this article, we will delve into the various reasons why term insurance claims may get rejected.

What Is Term Insurance?

A term insurance plan is a simple solution, offering an effortless way to safeguard your family's financial future. It serves as a pure risk insurance cover, which means that it provides a sum of money to your family should you pass away when its coverage is active. It supports your family and helps them meet their financial needs, like the day-to-day expenses, children’s education/wedding, outstanding loans, etc.

For your nominee to get the cover amount under your term insurance plan, they’ll need to make a claim to the insurance company.

What Are The Reasons Why A Term Insurance Claim Might Get Rejected?

Here are some potential reasons that can lead to claim rejections -

1. Misrepresentation or Non-Disclosure

When purchasing a term insurance policy, you will be required to furnish various personal details such as your name, age, address, educational qualification, occupation, and more. You may also be required to declare your medical history, your family's medical history, any pre-existing medical conditions, and the details of any past surgeries or treatments.

As the next step, your insurer may ask you to submit supporting documents, such as proof of identity (such as an Aadhaar Card), income tax returns, recent passport-sized photographs, etc. Lastly, you will need to provide information about any existing life insurance policies you currently have, as well as any policies you have had in the past.

It is important to be transparent while filling out the proposal form, ensuring that all the information provided is truthful and accurate. Furthermore, it is essential to submit the required documents accurately. Failing to do so can have severe consequences, resulting in the rejection of your family’s term insurance claim.

Remember, you won’t be there to support your family at the time of the claim. So, doing your diligence can ensure that they receive the appropriate financial assistance they need - in your absence.

2. Policy Exclusions

Another reason why a term insurance claim might get rejected is ‘exclusions.’ These are specific situations that are not covered by the policy. The exclusion in most term insurance policies is death by suicide in the first year of policy purchase and waiting period. However, the premiums paid (excluding taxes) are returned to the nominee.

Besides suicidal deaths within the first policy year, term insurance plans cover all other types of deaths. There may be certain waiting periods that may apply - which is the time period before your insurance policy steps in to cover the expenses. The Saral Jeevan Bima policy [UIN: 109N128V01] has a waiting period of 45 days before the coverage begins. This means that the policy will not honour any claims - until the waiting period has passed.

Furthermore, if you have chosen to include riders (optional benefits) in your policy, certain situations may be excluded under those as well. Therefore, it is important to familiarise yourself and your family with the inclusions and exclusions of both, the term plan and the riders. It will facilitate a smooth and hassle-free claims experience for them when the need arises.

3. Lapsed Policy

Once you have purchased a term insurance plan, it is essential to make regular premium payments to keep it active. If you miss the due date for a premium payment, the insurance company will offer you a grace period. During this grace period, you still have the opportunity to make the missed payment and renew your policy. However, if you fail to pay the premium within the grace period, your term insurance policy will lapse - terminating all the associated benefits.

It is important to remember that once the policy lapses, your nominee will not be able to file any claims in the unfortunate event of your passing during the policy tenure. Therefore, it is of utmost importance that you make timely premium payments for your policy.

Note: _To make prompt payments, you can consider setting up auto-debit or standing instructions on your bank account. This way, the premiums will be automatically transferred to the insurer - minimising the risk of policy lapse due to non-payment of premiums. _

4. Documentation Issues

In order to file a claim, your nominee will have to submit a claim request to the insurer. For that, first, they will need to fill out a claim form and provide various supporting documents to the insurance company, as per their instructions. Once these documents are submitted, they may ask for additional documents. Then, they will carefully review all the submitted documents to ensure authenticity.

If everything is found in order, they will process the claim. However, if the documents your nominee has submitted are inadequate or if any discrepancies are found, there is a possibility that the claim will get rejected.

It is important to note that the claims process and documentation requirements can vary among insurance companies. Therefore, to know the steps involved in filing a term insurance claim when you purchase term insurance is essential. This will ensure that the claim is filed correctly, avoiding unwanted complications. Further, you must know the list of documents required to file the claim. Make sure your nominee knows all these details, as you will not be around to to assist them - at the time of need.

Once you obtain the list of required documents, gather them all and store them securely in a safe place. You can also consider opening an e-insurance account or creating an account on the Digilocker app to store your documents digitally. Make sure to share the account details with your family - so that they have convenient access to all the necessary documents whenever needed.

Conclusion

The purpose of term insurance is fulfilled only when a claim is successfully processed. Therefore, you must understand the reasons behind claim rejection and take the necessary precautions to ensure the right things to do so that your claim is processed. This will help you ensure a smoother claim process for your nominee - helping them navigate the challenges that may arise along the way.
Product Disclaimer: Saral Jeevan Beema Policy [UIN: 109N128V01] is a non-linked, non-participating individual pure risk, premium life insurance plan.