Reasons for Term Insurance Claim Rejections

A term insurance plan covers your life. As a policyholder, you buy and maintain the plan so that your family members get an adequate amount of financial assistance if you die unexpectedly. You would definitely not want your family members to run from pillar to post to get that claim amount. It is therefore important for you to ensure that your term insurance claim is not rejected. Take a look at this article to know about the common reasons for which term insurance claims are rejected so that you can prevent such an incident from taking place.

Reasons why term insurance claims are rejected

Unfortunately, you won’t be around at the time of a claim. Your family members have to do it. So make sure you pull the right chords beforehand to ensure the claim is paid when there is a requirement. The claims are commonly rejected if:

  • Incorrect details: Term plans are available quite easily these days. Many insurers don’t even ask you to undergo a medical assessment. The policy is issued on the basis of trust. You therefore have to be completely truthful and declare all correct medical history. If there is a pre-existing illness, mention it. Also, be careful to fill in the application form correctly. Minor mistakes pertaining to your age or even residence address can lead to the claim being rejected later on. So take some time and fill in the details accurately. Giving incorrect details such as your height, weight, existing policy details, age, profession etc. will definitely put your loved ones in trouble, at the time of a claim.
  • Concealed information: If you hold back information while applying for a term plan, in all probability, the claim will be rejected later on. For example, if you are a smoker and you mention you don’t smoke on the term insurance application form, it can be highly troublesome. At the time of a claim, the insurer will run a scrutiny and such concealed information will be discovered. This will lead to the claim being rejected. Details of consuming alcohol or drugs should also be informed to the insurer without fail.
  • Lapsed policy: The insurance provider promises to cover your life in return for a premium that you pay. It therefore goes without saying that the premiums should be paid on time. If you miss paying a premium, your policy may get lapsed. If a claim is made while the policy is lapsed, the claim will not be honoured. Pay the premiums on time and keep the policy active at all times. You never know when a misfortune can strike. The insurer does give you a grace period within which you can pay your premiums. However, if you fail to do so, you would end up having a lapsed policy.
  • Delay in filing claim: You can imagine the emotional stress your immediate family members would be going through if you die suddenly. In that state of mind, it would be difficult for them to file a term insurance claim. However, it is vital to file a claim within the stipulated time and if there is a delay, the claim may be rejected. Speak to your nominees and explain this to them. If you feel your nominees won’t be able to handle the situation, bestow the responsibility on a trusted friend or family member.
  • Type of death suffered: Your life insurer promises to pay the sum assured when a claim arises. But, every insurer has a list of exclusions. Exclusions are nothing but situations under which your claim would be denied. If you commit suicide soon after buying the term plan, your claim would be dishonoured. This is because, deaths such as suicide is covered only after completing one policy year. Insurers will investigate the cause of your death and accordingly settle the claims. Therefore, it is important to understand the policy wordings carefully.

Improper documents submitted: A common reason for claims being rejected is documents being submitted incorrectly. Your nominees need to submit the right documents along with the claim form to get the claim processed smoothly. So educate them about the document requirements as soon as you buy the plan and refresh their memory from time to time. Also, keep them in the loop about your term insurance policy documents.

The bottom line

Term insurance claims are not rejected unless there is any fundamental mistake. You have to work very hard to ensure these mistakes are avoided. Death is inevitable.  But, such incidents happen to many people every day. So hope for the best but be prepared for the worst and tell your family members what they need to do if there is an unfortunate incident. This will make the term insurance claim process smooth and hassle free for everyone.

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