Claim Settlement Process for a Child Insurance Policy

As a parent, you go to lengths to decide on the best child plan that will help create a financial net for your child’s future needs in your absence. If you have already bought a plan, learning the claim settlement process for a child insurance policy becomes the next crucial step.

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This article will discuss the complete insurance claim process for a child plan in detail.

What is an Insurance Claim?

An insurance claim is a lawful application submitted by the policyholder or nominee to the insurance company. The formal application is to demand payment of maturity, rider, or death benefits from the company after the occurrence of an incident.

The incidents covered are as per terms decided by both the parties (company and policyholder) while buying the plan. A few examples of such incidents are: 

  • Accident of policyholder

  • Death of assured

  • Diagnosis of critical illness of the assured person

  • Child attains maturity age

The claim settlement amount helps the policyholder finance different life goals such as child’s education needs, hospital bills, and marriage expenses.

Eligibility Criteria of a Child Policy

The insurance company fixes the eligibility criteria, sum assured, policy term, and other conditions of the child insurance plans. 

The general criteria to buy a child insurance policy are as follows:

  • Entry age of Parent: 18—60 years

  • Entry age of Child: 30 days—18 years

  • Maturity age: 18-65 years

  • Policy Term: 5—25 years

  • Sum Assured: Rs. 1 Lakh—10 times of premium paid annually

  • Premium Payment Frequency: Annually, semi-annually, quarterly, monthly, and One-time

  • Premium Payment Mode: Lump sum, Regular, and Limited

Child Insurance Policy Claim Process

The policyholder can claim settlement for rider benefits, death benefits, or maturity amount in case an event covered under the policy terms takes place.

A few details of child insurance claims:

  • The death benefits are given to the nominee in case of the demise of the policyholder.

  • The maturity benefits are provided to the policyholder on attaining maturity age by the child.

  • The best child plans offer a range of rider benefits to the policyholder on payment of extra premiums. These riders help provide an extra financial net to your child and family in an unforeseen event.

  • Some of them are:

    • Accidental Death Benefit Rider

    • Accidental Total or Partial Disability Rider

    • Critical Illness Rider

    • Hospital Cash Benefit Rider

    • Waiver of Premium Rider

Death Claims Settlement Process

Let us learn the child insurance death claim process from the steps mentioned below:

Step 1: On the occurrence of the demise of the policyholder, inform the incident as soon as possible to your insurance company. You (nominee/ beneficiary) can do this in the following ways:

  • Going to their nearest office

  • Calling on their toll-free number

  • Sending an email

Step 2: Fill out the claim form and submit it formally with the following details:

  • Particulars of the child plan

  • Date of incident/ maturity age

  • Cause of incident

  • Name of nominee/ beneficiary, etc.

Step 3: Present the supporting documents and relevant reports (mentioned in the next section).

Step 4: The insurance company appoints a claim settlement assessor. They verify the case and the documents provided by you.

Step 5: The assessor passes the case after thorough checking.

Step 6: If further investigation of the case is not required, the company approves your claim.

Step 7: It transfers the maturity or death benefit within 30 days of submission of documents.

Maturity Claims Settlement Process

Follow the following steps for claim settlement of the maturity benefits of your policy:

Step 1: The insurance company reaches out to the policyholder on attaining the maturity age by the child.

Step 2: You need to fill out a bank discharge form provided by the company.

Step 3: Submit the required documents to your bank, with the accurately filled bank discharge form.

Step 4: The insurance company deposits the maturity benefit amount in your bank account.

People also read: Sukanya Samriddhi Yojana

Rider Claims Settlement Process

Settlement of rider claims is provided in the following ways:

  1. For Accidental Death and Waiver of Premium Rider: 

    The process of death claims settlement is followed.

  2. For Critical Illness, Hospital Cash, and Accidental Total or Partial Disability Rider:

    Step 1: Inform the insurance company

    Step 2: Give the duly filled claim form to the company

    Step 3: Submit relevant documents

    Step 4: Provide the policy copy to the company

    Step 5: Insurance company investigates the case, as needed

    Step 6: On approval of the case, the company will proceed with the payment of rider benefits to your bank account.

Documents Required

For claiming settlement, the submission of relevant documents is the most important step to prove your case. 

The policyholder/ nominee must prepare the following documents before applying, on a case-to-case basis:

  • Duly filled application form for claim

  • Original policy document

  • Death certificate

  • Birth date proof

  • Medical certificates/ prescriptions/ health diagnosis reports

  • FIR copy (in case of unnatural death)

  • Post-mortem report (in case of unnatural death)

  • KYC of the nominee/ beneficiary

  • Account details (for transfer of payment)

Exclusions for Claim Settlement

The best child insurance plans offer death benefits. However, insurance companies reserve the right to reject a policy claim under certain situations. 

The situations excluded from child insurance claims are as follows:

  1. Suicide Cases:

    The insurance company rejects the death benefit claim of the nominee if the policyholder commits suicide before the completion of 1 policy year.

  2. Participating in Adventurous Activities:

    The insurer also rejects the claim if the policyholder willingly participates and dies while performing dangerous sports like skydiving, bungee jumping, and mountaineering.

  3. Overdose from Alcohol or Narcotics:

    The insurer denies claim benefits if the policyholder dies from overconsumption of alcohol or an overdose of narcotic drugs.

  4. Death due to Drunken Driving:

    The nominee does not get any benefit if the insured dies while driving a vehicle under influence of alcohol or drugs.

  5. Involvement in Criminal Activities:

    There is the least scope of claim settlement in case of the death of the insured due to involvement in any illegal business, gang wars, or criminal activities.

Types of Child Policies

The type of child insurance policies can be categorised in the following ways:

  • Child ULIP Plans

  • Traditional Endowment Plans

Here are some details on both:

Features Child ULIP Plans Traditional Endowment Plans
Life Protection
  • Offers life insurance coverage
  • Gives high death benefits
  • Gives life coverage
  • Offers medium death benefits
Maturity Benefits
  • High returns on maturity in the long term
  • Maturity returns depend on the mutual fund portfolio selected by you
  • Medium returns on maturity
  • Provides the sum assured and a bonus amount as a maturity benefit
Premium
  • Premium amount is high
  • A part of the premium of the child plan covers the premium of the life insurance
  • Rest of the premium is invested in equity and debt-based mutual funds
  • Premium amount is medium
  • Part of the premium goes into life insurance coverage
  • Rest of the premium is invested in the guaranteed sum assured on maturity
Transparency of Investment
  • You can’t keep track of your investments
  • You can track your investment portfolio
Flexibility of Investment
  • Option to change your investments is not allowed
  • Free and paid switches of the fund are allowed to manage your profits and risks
Goal
  • Builds medium-to-high wealth for the future need of your child
  • Builds guaranteed fixed returns to give financial security to your child
Tax Benefits
  • Tax deductions available u/ Section 80C and 10(10D) of the Income Tax Act, 1961
  • Tax deductions are provided u/ Section 80C and 10(10D) of the Income Tax Act, 1961

In Conclusion

Claiming settlement for the best child insurance plans is fast and easy if you immediately communicate with your insurance company on the occurrence of any unfortunate event. The claim settlement process goes smoothly if the policyholder makes timely premium payments during the policy tenure. Submit all the required documents and fully cooperate on your case with the company officers to get the child policy claims in your account.

FAQ's

  • What are IRDA guidelines for claim settlement?

    Insurance Regulatory and Development Authority (IRDA) regulates the terms for the claim settlement process of an insurance policy. An insurance company must settle the claims between 30-45 days from the date of communicating the requirement of the last relevant document to the policyholder. 
  • How is insurance claim settlement calculated?

    The Claim Settlement Ratio (CSR) of an insurance plan is calculated with the formula given below:
    CSR= total no. of claims settled in 1 year÷Total no. of claims in that year×100
  • What is the maximum time in which the insurer should settle a claim?

    As per IRDA guidelines, the insurer must settle the claims within 30-45 days of the insurance company communicating the required documents with the policyholder.
  • What are the documents required for claim settlement?

    Listed below are the required documents for making a claim settlement application:
    • Accurately filled out claim application
    • Original policy document
    • Death certificate
    • Birth certificate
    • KYC documents of the insured and nominee
    • Bank account details

*All savings are provided by the insurer as per the IRDAI approved insurance plan.
*Tax benefit is subject to changes in tax laws. Standard T&C Apply
#The lumpsum benefit is calculated if policyholder invested ₹10000 monthly for 10 years in the fund with a policy term of 20 years. This Point To Point past performance data of last 10 years has been used to illustrate a scenario for the customers benefit. It is assumed that the past 10 years returns would have also been delivered in last 20 years. This is not guaranteed and not in anyway indicative of what the customer may actually get 20 years from now. The investment is subject to market risk and the risk is borne by the policyholder.
+Returns Since Inception of LIC Growth Fund
~Source - Google Review Rating available on:- http://bit.ly/3J20bXZ
^^The information relating to mutual funds presented in this article is for educational purpose only and is not meant for sale. Investment is subject to market risks and the risk is borne by the investor. Please consult your financial advisor before planning your investments.

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