Ch. 11: Term Insurance Claims Process?

Given the nature of term insurance, you'll be completely out of the picture at the time of claim settlement. If things go wrong, you won't be there to help your family out. Therefore, as important as it is to buy a term plan for your family, it is equally important to educate them about the term insurance claim settlement process.

So, what are the steps involved in filing a term insurance claim? Which documents will your nominee need to submit? Is there anything you can do now to ensure they don't face any difficulties later - at the time of claim?

Let's find out.

Documents required for term insurance claim

Here’s a list of documents your nominee will have to submit at the time of filing the claim -

In case of Natural Death	In case of Unnatural Death
Original policy certificate Copy of death certificate by the local authority Address proof of the nominee Photo identity proof Cancelled cheque Copy of bank passbook Copy of medico-legal cause of death Medical records (Admission notes, Discharge / Death summary, Test reports, etc.)	Original policy certificate Copy of death certificate by the local authority Address proof of the nominee Photo identity proof Cancelled cheque Copy of bank passbook Copy of medico-legal cause of death Medical records (Admission notes, Discharge / Death summary, Test reports, etc.) Copy of FIR Panchanama Inquest report Driving license Postmortem report

Please note, this list may vary across insurance companies. This is just an indicative list.

The process for term insurance claim settlement is as follows -

How to claim term insurance

• Informing the insurer
  The first and most important step in the claim process is informing the insurance company about the claim. This can be done by physically visiting the insurer's nearest branch office, contacting them via phone, email, or online through their website. Once the insurance company is informed, the claim settlement process will be initiated.
• Filling the claim form and submitting the documents
  After notifying the insurer, your nominee will have to submit several documents along with a duly filled claims form to support the claim. Your nominee can get the claim form from the insurer's website or the branch office. The claim form as well as the list of documents will be different for different insurance companies. Also, in some cases, the insurer may ask your nominee to submit some additional documents to verify the claim further.
• Claim approval and payout
  Once all the required documents are submitted, the insurance company will assess them and decide whether to approve or reject the claim. If approved, the claim will be paid to your nominee as per the payout option chosen

Generally, it can take days or even weeks for the insurance company to process your nominees’ claim. However, there is a 24-hour claim settlement guarantee that most insurers offer today.

What is the 24-hour claim settlement guarantee?

Most insurance companies have started to offer a guaranteed timeline to settle your nominees’ claim within a stipulated time period. While some insurance companies who offer this guarantee promise to settle the claim within a period of 24 hours, some even promise to settle it within a few hours.

Not all insurance companies offer this guarantee. So, before you finalise a plan, ensure you check with the insurance company if the guarantee is applicable for the policy you’re interested in buying. Also, you should know that for this guarantee to be valid, there is a list of terms and conditions that need to be met.

Conditions For Claim Settlement Guarantee

• Limit on the cover amount: Every insurance company will specify a maximum limit on the cover amount up to which they will offer this 24-hour guarantee.
• Applicable only after the policy completes a fixed number of years: This guarantee will be applicable only if your policy is in force for a certain period specified by the insurance company. If you pass away before this period, this guarantee won’t be valid.
• Not valid for lapsed and revived policies: If you miss a premium payment and your policy lapses, this guarantee won’t be applicable.
• Only valid for standard claims: Another important condition is that this guarantee will only apply if the claim does not require a medical, legal or any other investigation, additional document submissions, legal procedures, etc.
• Document submission: Some insurance companies have a condition that your nominee will have to submit all important documents at the time of intimating the claim. Not only this, but there is also a closing time in a day for the submission of documents. If it is a working day, most insurance companies need the documents before 2 or 3 PM. If your nominee doesn’t submit the documents before this deadline, the claim will only be initiated the next day.

What happens if there is a delay in insurance claim settlement?

For an eligible claim, for every day of delay, the insurance company will compensate by paying interest on the claim amount. The interest rate for this may vary across insurance companies. A few insurers have mentioned on their website that they will pay the interest as per the bank rate, whereas some others have mentioned that they will pay the interest at a rate of 6.25%.

How can you ensure that your family receives the claim without any difficulty?

In order to ensure your family's claim is settled smoothly, without any hassle, there are some things you must keep in mind -

➔ Fill the proposal form right
The proposal form is the basis on which any insurance company insurer provides the cover. Hence, to ensure lesser investigation at the time of your family’s claim, it is important you make accurate and honest declarations in the proposal form.

➔ Pay the premiums on time
Ensure that you pay all your premiums on time so that your policy remains active until the end of the policy term. You can put standing instructions on your bank account to avoid delays and lapses.

➔ Opt for MWP, if married and male
If you have any loans or liabilities, as per the law, your term insurance claim will first be used to settle those, and then your nominee will receive the remaining amount. If you’re married and male, you can avoid this by signing the Married Women’s Property Act addendum at the time of purchasing the term insurance policy.

➔ Keep all documents in one place
You can create an e-insurance account and keep your policy and all other necessary documents in one place, and inform your nominee so that they have ready access to all the documents at the time of claim.

➔ Take your family through the claims process
You won’t be there to fix things for your family if anything goes wrong at the time of claim settlement. So, ensure you inform your nominee about the policy, take them through the claim settlement process, give them a list of documents they’ll need to submit, etc. In case you bought the policy through an agent or a financial advisor, you can connect them to your nominee so that your nominee knows whom to contact if there are issues at the time of claim.

The things we’ve mentioned above might seem of little importance now, but, if not carefully implemented, they might make things difficult for your family at the time of claim settlement. Hence, take the extra efforts NOW so that your family doesn’t have to experience issues LATER.