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What is a Term Insurance Claim?

A term insurance plan is a significant part of your financial planning. Due to the uncertainty of life, you can never depend just on your reserved funds to accommodate your family's dreams. A term insurance plan goes about as a financial back-up for your family on account of any unfortunate event. A term insurance claim is filed by the policy beneficiary to the insurance company in order to avail the death benefit in case of the policyholder’s unfortunate demise. A majority of insurance companies offer a seamless claim processing facility so that the beneficiary can file claim and avail insurance coverage seamlessly.

The Right Process to Make a Claim

When the policy holder passes away, family members(dependants) or the nominee under the policy can send a claim intimation to the insurance company as soon as possible. In spite of the fact that your family might be in distress, they should not defer in making the claim. This is to stay away from any complexities in the process.

However, prior to intimating the insurance company, the beneficiary should keep in mind some important facts.

  • Insurance policy should be in force and all the premiums should be duly paid.
  • The situation for which you are filing the claim is filed should be covered under policy.
  • The things which are not covered in the policy.

Term Insurance Claim Process

Step 1: Inform the insurance company about the claim

The initial step is to inform the insurer about the claim. The nominee needs to present the claim settlement along with a death certificate & other required document. The required details for the intimation of claim are the name of the policyholder, policy number, date of birth of the insured, place of death, the cause of death, the name of the beneficiary, etc. You should inform the insurance company about the death of the policyholder within three months of the demise. You can either physically visit the branch for submitting the claim form, or fill the form online, and submit it for claim settlement.

Step 2: Assessment of claim by the insurance company

Once you have applied for the claim, the insurer will now assess your claim request. The documents are scrutinized & thoroughly checked. The insurance company can ask for more details & documents if needed.

If a claim is made within the 3 years of policy issued, the insurer does an additional investigation in order to ensure the genuineness of the claim. The insurer can:

  • Verify with the hospital whether the demised person was admitted in the hospital or not.
  • In case of a flight crash, the insurer can verify with the airlines whether the policy holder was the passenger of the flight or not.
  • If the death is due a critical illness, the insurer will ask the hospital the details like medical records, doctor’s certificate, etc.
  • In case of suicide, murder or accident then panchanama, police FIR report and post mortem report will be required.
Step 3: Documents Submission

The nominee should submit all the required documents as early as possible to accelerate the claim process and avoid and delay.

Step 3: Claim settlement

On the basis of the assessment & investigation, the insurer will now either accept or reject the term insurance claim. In the case of approval, the insurer will compensate the sum assured of the nominee. Alternatively, a rejection letter will be provided in the case of claim rejection, stating the reasons for rejection. The Insurance Regulatory and Development Authority of India (IRDAI) has mandated that insurance companies must complete the claim settlement within 30 days. As per IRDAI rules, in the case of the claim requiring further investigation, the claim has to be settled within six months.

Required Documents for term insurance claim submission (icons)

  • Duly filled claim form
  • Death certificate of the policy holder
  • Original policy documents
  • Identity proof documents of the nominee
  • Medical records of the policyholder
  • Last medical attendant physician certificate
  • Deeds of assignments/ re-assignments if any
  • Any other documents related to claim (such as FIR, Post mortem report etc)

Essential Inclusions and Exclusions

Term Insurance is applicable to both natural and unnatural death. For death by suicide cases, the claim settlement will be done after one year of taking the policy. Inclusions and exclusions of your policy depend on the risk factor that you possess. So, the policy benefits of a smoker’s would differ in comparison to that of a non-smoker. However, different plans of term insurance mostly offer the same benefits. The length of coverage would vary from one plan to another.

Term insurance claim rejection reasons

  • There are some chances of your term insurance claim if you have not provided the correct information in the claim form, or failed to submit the required documents.
  • Failure in updating nominee information
  • A lapsed insurance policy being lapsed because of non-payment of premiums.
  • Concealment of information, like not disclosing the correct medical history, or hiding lifestyle habits like tobacco or alcohol consumption

Tips to Avoid Term Insurance Claim Rejection

The following are the list of things you can do to avoid getting your claims rejected-

1. Making sure that the beneficiaries/nominees are well aware of the policy claim process.
2. Ensuring accurate information is being provided to the insurer at the time of buying term insurance. It includes everything from your existing medical condition, income, age, previous/existing policy details, etc.
3. Avoiding policy lapse due to non-payment of the premiums.
4. If the insurer is asking you to undergo a medical examination, you should.
5. Be well aware of the coverage of your term plan and its exclusions.
6. Mention the beneficiaries/nominees if you haven’t done that already.