A term insurance plan is an essential component of your financial planning. This is because no one can predict what lies in the future, which is why it is necessary to stay financially protected in case of any mishap. A term insurance policy will help in providing your family with financial security in case of your unfortunate demise. With the death benefits of the policy, your family will be able to maintain their lifestyle and manage their expenses even without your regular income.
Now that you know what term insurance is, it is also important to be aware of how a term insurance claim is made. When making a claim, the policyholder’s family may understandably be under a considerable amount of stress. At such a time, struggling with the claims process of the insurance company is the last thing that they would need. To avoid those hassles and ensure a smooth process, it is always better to be aware of the claim settlement process of a term insurance plan.
So, take a look at the steps that need to be followed while filing for a term insurance claim:
Inform the insurance company
The beneficiary of the term insurance policy needs to inform the insurance company about making the claim for them to start the claims process. The beneficiary needs to first submit the claim settlement form, which they can download from the insurer’s website. The other way is to just visit the insurer’s nearest branch and pick up a claims form.
Make sure to keep all important documents ready
Along with the claims form, the beneficiary will also need to keep a few documents ready with them to submit to the insurer. These documents include the death certificate of the policyholder, age proof of the policyholder, original insurance papers, and any other documents as per the specific requirements of the insurer.
Wait while the insurer assesses your claim
Once a claim is made, the insurance company will assess the claim by checking with relevant authorities such as the accident investigation personnel and doctors. The insurer will also check all the documents submitted along with the claim. As per the Insurance Regulatory and Development Authority of India (IRDAI), any death claims need to mandatorily be settled within 30 days by insurers. This period is considered from the time the beneficiary of the term insurance submits all the required documents. If an insurance company needs to conduct additional investigation, it will need to complete the investigation process within 60 days of receiving the claim request and then settle the claim. If this time limit is not adhered to, insurance companies can be charged with penal interest.
The claim is settled by the insurer
Based on the assessment, the insurance company will then approve or reject the insurance claim. If the claim is approved, the insurance company will then transfer the sum to the beneficiary’s bank account. If the claim is rejected, the insurance company will provide a letter stating the reasons for rejecting the claim. Do note that if a claim is made within 3 years of when the term insurance policy was bought, it is quite likely for insurance companies to then conduct further investigation.
Why do some term insurance claims get rejected?
A term insurance policy can get rejected if the insurance company has not been provided with accurate details in the claim form or has not been given all the required documents. Some of the other reasons could be a failure of making premium payments because of which the term insurance policy has lapsed, not disclosing medical history, concealing information, not disclosing lifestyle habits such as smoking or alcohol consumption, or even a failure to update the nominee details in the policy.
Being aware of the insurance company’s claim settlement process is very important, so that there are no hassles while making a claim and the entire process happens smoothly. Also, it is advisable to buy a term insurance plan only from an insurance company that has a good term insurance claim settlement ratio. This way, you know how efficient the insurer is in dealing with claims that they receive.