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How Not To Get Your Term Insurance Claim Rejected

Afraid of term insurance claim rejection? Know common reasons why term insurance claims get rejected and how to prevent it. Visit now!

  • 2,989 Views | Updated on: May 30, 2024

Life insurance, term insurance, insurance policy - these are all terms that you hear growing up or, more so, as a grown-up. Although you may not know the nitty-gritty of the policies, you are not entirely alien to the terms. As you come closer to buying insurance, you might actively start taking interest in knowing all the details to make the best choice for yourself and your loved ones. One of the most critical factors in making this decision is claim settlement.

Claim settlement in life insurance is the payout money that the nominee/ family member can claim in case of the demise of the policyholder. While buying term insurance, it is important to ensure that you understand the claiming process clearly, so that your loved ones can claim the settlement amount without any hiccups. To understand this better, it might be a good idea to look at the term insurance claim settlement ratio of the companies that you have shortlisted to buy your insurance. This ratio is the percentage of claims that the insurance company has settled in the year out of the total number of claims that had been filed. It will help you gauge how trustworthy the said company is because the term insurance settlement ratio of a company is directly proportional to its reliability when it comes to ensuring financial stability for your loved ones after you.

Documents Needed to Claim Settlement

Now you must be wondering how to claim term insurance after death. To accomplish claim settlement in life insurance, the first step would be to inform your insurer as soon as possible about the demise and the cause for the same. Along with this, you will have to present certain documents, which include:

  • The filled claim forms
  • Death certificate
  • Original documents of the policy
  • Any other medical reports from the hospital
  • Age proof/ID proof of the nominee
  • And any other specific document that might be asked for

After document submission, the insurance company investigates further to confirm the facts to initiate term insurance settlement. Once the data is verified, the insurer settles the claim, providing the payouts.

Reasons for Term Insurance Claim Rejection

Having understood how to claim term insurance after death, it is important for you to know that there are instances where the claims are rejected, wherein you may not reap the benefits despite paying the premiums on time.

Some term insurance claim rejection reasons include:

  • Exclusions- There are pre-defined instances where the insurer may not provide cover. For example, if the policyholder commits suicide during the first year of the policy, they are not eligible to claim the payout.
  • Giving false information (personal and medical) - All the information provided to the insurer must be correct, be it about you or the nominee, the nominee’s medical history, any pre-existing illness, etc. You must be transparent to your insurer throughout to avoid getting your claim rejected later.
  • Non-payment of premiums- If due to any reason you are unable to pay your premiums on time, a grace period of usually 30 days is given. Failure to pay even after the grace period will lead to policy lapse.
  • Avoiding medical tests- Your insurer verifies every medical detail provided by you, particularly in the case of high age or high coverage. Avoiding medical tests or giving incomplete information during medical tests before buying a policy leads to higher chances of claim rejection.

Now that we know about the importance of term insurance claim settlement ratio and some term insurance claim rejection reasons, we should be careful while filling the insurance form and keeping the company updated through the course of our insurance to get guaranteed claims. Claim settlement thus becomes one of the most important things to consider while buying term insurance and securing your loved ones!

- A Consumer Education Initiative series by Kotak Life

Amit Raje
Written By :
Amit Raje

Amit Raje is an experienced marketer who has worked in various Fintechs and leading Financial companies in India. With focused experience in Digital, Amit has pioneered multiple digital commerce in India. Now, close to two decades later, he is the vice president and head of the D2C business department. He masters the skill of strategic management, also being certified in it from IIMA. He has challenged his challenges and contributed his efforts in this journey of digital transformation.

Amit Raje
Reviewed By :
Prasad Pimple

Prasad Pimple has a decade-long experience in the Life insurance sector and as EVP, Kotak Life heads Digital Business. He is responsible for developing user friendly product journeys, creating consumer awareness and helping consumers in identifying need for life insurance solutions. He has 20+ years of experience in creating and building business verticals across Insurance, Telecom and Banking sectors

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