Term Insurance Claim

The term insurance plan is the most simple and purest form of life insurance. The policyholder can get a large amount of sum assured, i.e., life cover at a relatively nominal premium rate. In other words, it provides financial support to the policyholder's family in case of his demise. 

Sometimes, a policyholder is the sole bread earner of the family. In that case, the death of that person results in turmoil in the family, and they may have to face a financial crunch. Here, the term insurance plan comes in handy. Hence, the sole reason for buying term insurance is that the policyholder's family, i.e., dependents or nominees, have ample resources that would make up for the loss of income in case of the policyholder's sudden death. 

The term insurance claim is filed by the nominee to the insurance company to get the death benefit in case of the policyholder’s unfortunate death. Most insurance companies offer a seamless claim facility so that the beneficiary can file a claim easily.

Term Insurance Claim Process

There are three steps of a process for term Insurance plans:

• Claim Intimation: The beneficiary intimates the insurance provider with the death certificate and submits all the required claim documents. This should be carried out as soon as possible after the policyholder’s demise.
• Claim Assessment: The claiming team personnel will check the documents, and if there is any further document required, it is informed to the claim beneficiary by sending a requirement letter. If not satisfied with the given documents, the insurance company may also send its team for scrutiny of the claims.
• Claim Decision: The claim is then approved and settled. Hereafter, the claim money is sent to the beneficiary's bank account through NEFT. If the claim is rejected, the beneficiary is informed, stating the reasons for rejection.

Documents required for Term Insurance Claim Process

The following documents are a must to be submitted to the insurer for a death claim:-

• Original plan document
• Death certificate's original copy
• Post-mortem report or autopsy report for unnatural deaths
• Claim form duly signed and completed.
• Medical certificate or last attended hospital certificate for knowing the cause of death
• Age proof
• FIR report in case of accidents
• Assignments deeds
• Legal heir if there is no nominee
• Discharge form
• Medical certificates
• KYC documents of the nominee

There can be other documents required by the policy provider company. It depends on case to case basis.

Claim settlement

As per the norms of the IRDAI of India, all insurance companies must settle the claim within a specified time. The claim should be settled within 30 days from the beneficiary's submission of the claim form. In case the claim needs further investigation, the insurer is required to complete the entire process within 6 months from the date of receiving the written intimation of the claim.

Term Insurance Claim Exclusions

• Death from a pre-existing medical condition

  If a policyholder does not inform of pre-existing disease or treatment undertaken, or injury that had symptoms before the commencement/revival of term insurance policy, it is mandatory for the insurer to pay the death claim.

• The insured is murder by the nominee

  If it is proved by law that the nominee is indirectly or directly linked in the murder of the policyholder, then the insurance company will reject the death benefit claim.

• Death due to drugs or alcohol

  Insurance providers can refuse to provide claims to habitual drinkers and drug abusers. It may be that drinking or drug addiction is hidden from the insurer when buying a policy. If the policyholder dies in a road or another accident in a state of being drunk or having drugs, the insurance claim may be rejected.

• Death due to hazardous activity

  If the policyholder meets a fatal accident while participating in adventure sports such as bungee jumping, sky or water diving, sports racing, water rafting, paragliding, etc., death in such activities may not be covered by the term insurance provider.

• Death during childbirth

  If a female policyholder doesn't inform about her pregnancy and dies during childbirth and complications related to childbirth, then the policy provider company will not pay the death claim.

• Suicides

  For suicides committed within 12 months from the date of receipt of the policy or revival of the policy, 80% of the premiums paid will be returned to the nominee. Since every plan has different terms for suicide, so one must check with the insurance company.

  *This list is only indicative and not exhaustive. Different term insurance plans have different exclusions.

Common Reasons for Rejection of Term Insurance Claim

The following are the reasons which lead to term insurance claim rejection.

• Wrong details entered in the application form of term insurance: Any wrong information submitted, whether knowingly or unknowingly, to the policy provider company can lead to rejection of claims. Any mistake can be detrimental. The person to be insured must enter all their details like income, qualifications, age, lifestyle habits (drinking or smoking), and any other information such as any existing term insurance plans and medical conditions by themselves to avoid any incorrect information. Since these factors play an essential role in determining the premium, any incomplete or incorrect data will later lead to the rejection of claims. Also, such wrong information is considered as fraud by the policy provider company.
• Hiding of Medical History: The person to be insured must disclose all the surgeries undergone by him. Also, any existing medical condition must be mentioned. All the above information is important in determining the premium rate. Also, while the calculation of premiums, lifestyle habits are also taken into account.
  
  Further medical conditions like cardiovascular diseases, blood pressure, cancer, and any type of hereditary problems of the family must be disclosed to the insurance company to avoid claim rejection.
  
• Not entering policy details by the policyholder himself: The person to be insured doesn't fill up the proposal form instead asks the agent to fill it up for him, which leads to the submission of wrong information or incomplete information. Since agents don't know the policyholder's medical history, they leave out the section, which will later lead to rejection of the claim.

• Nominee information left out: After the policyholder's death, all death benefits will be paid to the nominee of the policy. So, it is important to enter all the nominee related information correctly and keep their details like contact information, address, etc. updated with the company to avoid last-minute hassles and rejection of term insurance claims.

  Also, one should choose their nominee wisely. A married policyholder can choose their spouse or children, whereas for a single person, nominating one's parents would be better. If the nominee is a child (minor), then guardian information is also required.

• Lapsed policy due to non-payment of premiums: The insurance provider only settles a claim for a non-lapsed policy. For the lapsed policy, no claim support will be provided. The policy lapses after 30 days from the due date of premium. If a policy has lapsed, then all the paid premiums will not be returned, and no claim benefit will be provided. One can set up a direct debit system to ensure that the policy doesn't lapse. If the policy has lapsed, then the person insured can revive it by paying certain charges.
• Non-disclosure of existing insurance policy: One must ensure to disclose the details like policy number, name of person insured, the sum assured, and other such details before purchasing a new policy. Sometimes the person to be assured doesn't disclose these details, which leads to rejection of the claim of term insurance since concealing facts is considered fraud. Moreover, if a person has bought a policy later, then he/she must update the policy provider of the previously bought plan.

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