Top Reasons Why Most Term Insurance Claims Are Rejected

Receiving a term insurance claim rejection can be upsetting, especially if the policyholder is the primary financial provider for the family. Although the policyholder may not be present to address a denied claim, it is critical to understand and avoid common errors that might result in term insurance claim denials when you buy term

insurance.

1. Incorrect information on the application form: Misrepresentation of data can harm life insurance claims. You should carefully and correctly fill out the application form with information such as your age, salary, occupation, qualification, lifestyle (smoking/drinking), past policies and claims, and other factors. These are essential considerations in determining the premium. Incorrect or incomplete data may also constitute fraud and result in the termination of policy benefits.

2. Non-Disclosure of Medical History: Disclosure of prior and current medical issues, operations, surgeries, and so on is required because it affects the coverage premium. Family members’ health information, particularly problems such as_ cancer, cardiovascular disease, blood pressure, or any other genetic condition, must be given to avoid life insurance claim rejections. One has to understand that life insurance plans are often dependent on the health declarations or information that applicants provide.

Furthermore, if the insured did not disclose his correct occupation/hobby, which may be dangerous in nature, while buy term insurance and the information was so important that if he had disclosed the proper data, coverage could have been denied. Most online term insurance premium calculations also require you to include lifestyle factors such as smoking when determining premiums. If applicants withhold or provide misleading information, it may constitute a legal reason for denying a claim.

3. Not updating nominee information: When the life assured dies, the benefits are paid to the nominee or beneficiary, so it is critical to keep the insurance company up to date on the nominee’s details, such as their address and contact information. Failure to do so can cause problems during the claim process and may result in the rejection of your life insurance claim. Furthermore, choose your nominee wisely. A married person can nominate their spouse or children, and if you are single, then nominating your parents or any other family member would be a good idea. If the nominee is a minor, a guardian must also be listed in the policy.

4. Policy lapsed due to nonpayment of premiums: Claims are only settled for active insurance plans. A lapsed policy cannot provide any benefits. Sometimes policyholders neglect to pay their payments on time. Insurance providers provide a grace period to cover this. This grace period can last up to thirty days. However, if the policyholder does not pay the premium, the policy is considered lapsed. As a result, policyholders must ensure that they pay their term plan premium on or before the payment date. For example, if a claim is filed even one day after the policy has expired, the insurance company will reject it. In such instances, all previous premium payments are null and void.

5. Not filling out the insurance proposal form yourself: It’s common for clients to sign a blank cheque and a proposal form and hand them over to an advisor to fill in the details. However, no matter how close you are, the agent will not know everything about your health history, finances, and those of your family members. Be responsible and fill out the term insurance plan for yourself. This will also help you understand the life better and choose the best features that meet your family’s needs.

6. Not disclosing about the existing insurance policies: When you buy a term insurance policy, you must declare all of your existing policies (including the name of the insurer, the sum assured, and the policy number). Withholding information about existing insurance policies you have purchased can get your term insurance claim rejected, as this is relevant information essentially required by the policymaker for a complete risk assessment.

7. Policy Exclusions: Every insurance provider specifies a set of conditions under which all life insurance claim rejection reasons are given. This means that if you die for any of the reasons specified in the ‘Exclusions’ section, your life insurance policy will not pay out a death benefit. Some of them include suicide, drug overdose, and death by accident while intoxicated. Death due to any of these causes is bound to be rejected because they do not fall within a valid claim category according to insurance providers.

8. Contestability Period: At the time of purchase of a life insurance policy, insurance companies insert a contestability clause. This means that if a death occurs quickly after purchasing coverage, the claim may be refused. The contestability period begins with the purchase of a policy. Insurers’ contestability term ranges from one to two years. If death occurs within that timeframe, insurance companies may get suspicious and initiate an investigation. If your claim is rejected wrongly? Approach Grievance Redressal Mechanism. If you believe the insurer has rejected the claim without providing the beneficiary with a good reason, you can contact the Grievance Redressal Officer. Most insurers offer several ways for policyholders and nominees to contact them. To begin, nominees can contact the insurance company where the policyholder purchased the insurance coverage.

As mandated by the Insurance Regulatory and Development Authority of India (IRDAI), every insurance company has a dedicated grievance handling cell. The details of the grievance cell are usually listed in the policy document. The first step for a nominee is to visit the insurer’s website and go to the customer service or claims section. If the nominee does not receive a response within 15 days, he can contact the insurance company’s regional or central office’s grievance cell, stating that the grievance has not been acknowledged or addressed. If the problem is referred to IRDAI, policyholders can file a complaint with the regulator using the “Bima Bharosa system” (bimabharosa.irdai.gov.in), or they can contact a Grievance Redressal Officer (GRO) to file a more serious complaint.

Even after that, the nominee has the option of contacting the ombudsperson if no resolution is reached. The ombudsperson will hear the case and render a decision, which may ultimately assist a nominee in resolving the situation. So we are saying, If you properly follow the instructions above, you will not have to worry about your term insurance claims being denied. If you haven’t already begun planning to financially protect your family in the case of your death, you should do so immediately.