Death is inevitable, but the impact of death of sole bread earner can be devastating for the family, both emotionally and financially. Emotional loss is irreversible which only time can heal. But a good financial planning can minimize the impact of untimely death of somebody. A prudent person should always think and plan, how my family will continue to have the same if not better life style they are used to, post my demise. He/She simply opt for a good life insurance policy to compensate the financial support he used to give before his/her death. Often It is seen, insurance companies to reject a life insurance claim. An insurance claim may get rejected for various reasons. People should know few facts to reduce the claim rejection by insurance companies.
False Information
We must know that Life Insurance runs on concept of “Utmost Good Faith”…..in simple words It means…proper disclosure from both customer & insurance company. Hiding information even though it may seem trivial can lead to rejection of a claim. People often hide their smoking and drinking habits while filling the application, for example, while purchasing a term policy premium almost doubles when a smoker takes a policy against a non smoker. On event of death when actual information reveals, claim gets rejected. All shorts of informations, details like age, height and weight, profession, income should be disclosed exact. Some people even quote an inflated income to get a higher death benefits. It is very important, to be honest, and alert while filing the application form to save your family from unnecessary hardships.
Payment of Premiums
Pay premiums regularly. A in force policy only ensures death cover on event of death. Company rejects claim when policy falls in lapse mode due to non payment of premium within due time. Now a days insurance companies reminds you on various methods about premium payment intimation such as phone call, SMS, Whatsapp, E-mail etc. Its always advisable not to be casual in paying premium. Insurance companies also give a grace period, in most cases 15/30 days. If a policy lapses, all the paid premiums go to waste and there is no chance of getting it back. In case of genuine financial difficulty one can choose to opt paid up option to get reduced death cover.
Nominee Details
The nominee named by the policyholder receives all the benefits of the insurance cover. While purchasing filing single or multiple nomination is a mandate. An insurer may reject a claim if nominee details have not been filled or have not been updated. If one buys life insurance when he is young and name their parents as nominees. As they grow old, they fail to update nominee details such as inclusion name of wife or child, and if parents are not present when the claim arises, it gets rejected. To avoid rejection, keep nominee details up to date and keep an eye on correspondence from the insurer.
Contestability Period
While selling life insurance, companies insert a contestability clause in the policy. It means if a death happens shortly after taking a policy, the claim can be rejected. Its called early claim. As soon as a policy is bought, the contestability period comes into effect. Insurers have a contestability period ranging from one to two years. If death happens within that period, insurance companies may grow distrustful and launch an investigation. Though death comes without warning, claims get rejected in case of suicides.
Type of Death
Just like the contestability clause, insurance companies have a standard exclusion list of deaths to reduce losses. Not all types of deaths are covered by life insurance. Life insurance claims get rejected if the policyholder had been a part of hazardous activities or if he/she dies of a pre-existing disease. Insurers very minutely check the cause of death. Deaths due to natural calamities, terrorist attacks or homicides are generally not covered by insurance policies.
Delay
Insurance companies give an ample amount of time to file a claim. Claims getting rejected due to delayed filing are rare these days, but it can happen if the delay is too long. The Insurance Regulatory and Development Authority of India has directed insurance companies not to reject claims on delaying claim submission. However, family members of deceased should promptly file the claim. Insurers may not out rightly reject delayed claim but they may delay payment.
Avoiding Medical Tests
Insurance is a risky business and to reduce the risk insurers rely on proper assessment of your life. Insurers verify every medical detail given by an applicant to get a clear idea of the risk. Almost all companies asses your health condition on basis of declared facts such as height, weight, vision, addiction habits etc. If company feels necessary they will conduct medical tests, especially in the case of high age or high-risk coverage. If you refuse to take the tests or often observed to fabricate medical reports the chances of your claim getting rejected by the insurer will be very high. It is always prudent to go for medical tests as if a test is taken all pre-existing diseases are accounted for in the coverage.
