Term Life Insurance Claim Rejection: Why Gets Rejected?

Ever wondered what would happen if your term insurance claims get rejected? There would be grief of losing a dear member coupled with an unfading stress for upcoming financial liabilities. These could bring your family's world upside down. You certainly don't want to go through such adversities at an already adverse time, so you must try to prevent this horrific scenario from arising. As a policy buyer you need to understand the reasons held responsible for the rejection of a claim.

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The following points would help you know some of the major reasons behind claim rejection-

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Your premium is decided on age at which you buy the policy and remains same, throughout your life

Premiums can increase between 4-8% each year after your Birthday

Your policy application could be rejected or premiums increase by 50-100%, if you develop a lifestyle disease

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Callous Attitude towards Insurance

We always rush up through the insurance buying procedure as the latter involves a lot of careful reading and providing endless details while filling out the proposal form. In order to minimize our involvement in this lengthy and cumbersome process we prefer to get it done by our insurance agent and handover the overall responsibility of filling and submitting the insurance form to him.

All we do is a signature and then free ourselves by easily trusting the insurance agent (a third person) with a very crucial job (filling the proposal form) that decides the financial future of our loved ones in our absence. The second job that we perform is issuing a cheque to the agent. Well, honestly this must not be the practice. The agent doesn't know many significant details about us and our family's medical history. The agent may fill some incorrect details or miss some of them as he/she is always in a haste to sell maximum policies in minimum time.

Make it a point to fill the form yourself and keep a copy of it with you. Verify the details printed in the policy document with the copy of the details filled. In case of any discrepancy inform the insurance company immediately to rectify it.

Giving incorrect information in the application form

It is your foremost responsibility to reveal all the necessary information to the insurers. If you hide any significant facts and don't maintain transparency then your claim is bound to get rejected.

To overcome this situation, make sure you give out correct and true information regarding your age, height, weight, occupation, income, existing policy details and any other details asked for in the form. Usually we don't reveal the details of other policies we hold. It takes a little longer than usual to gather the details of the existing insurance policies.

Due to that reason, the details are hidden. This must be avoided and exact information about your existing insurance policy details must be provided so as to evade claim rejection in future.

Specify the Nature of your Job

There are jobs that carry no risks but then there are also jobs that are high risk or are life threatening. Jobs like working in a mine, fire fighting etc. involve high risks. The nature of jobs must be communicated to the insurer prior to buying the insurance policy. If the insurer feels it is hidden from them, the claim can be rejected.

Not disclosing medical history

The column asking about your medical history details is of remarkable importance as your overall health graph makes a huge impact on your Claim acceptance/rejection. The most significant part in the proposal form is that of the proposer and her/his family. Based on this information the insurer will arrive at the premium to be charged and whether the policy can be issued or not.

Ensure that you give out all the necessary facts regarding your and your family's medical history. It is also important to disclose the habits that affect your longevity such as consumption of alcohol and tobacco. Be very clear in declaring these details to avoid the claim rejection.

Refraining from medical tests

Based on the information provided in the proposal form, underwriter will assess the risk and the policy will be issued. When you opt for a higher sum assured it is mandatory to go through some medical tests. If you ignore these tests, your chances of facing a claim rejection would increase.

Policy lapse: The biggest threat to claim settlement

Policy lapse means your policy has lost its existence on papers. Filing claim for a lapsed policy won't fetch you anything, meaning to say your claim would get rejected. It is necessary to pay yearly premiums as maintenance towards your Term plan, on or before due date. Insurance companies offer few days as grace period in case you fail to pay the premiums on due date. Claim will not be paid if the policy is not renewed within the grace period so one needs to take utmost care regarding the same to remain secure against any untoward event.

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Not disclosing old Insurance policies

A lot of people who buy more than one insurance policies unaware of the necessary policy declaration rule, they do not disclose their existing policies to the new company. There are people who do it purposefully & there are also people who do not pay much attention to it thinking that they will be able to “escape” it and fool the company. However, you must know that companies are very particular about the policy related rules and regulations and it is absolutely necessary to declare your prior insurance policies. Regardless of how much your policy sum assured is (even if its 1 lac), you have to disclose your previous policies before taking a new life insurance policy (This means term plan, ULIPs with insurance cover, Traditional Policies). Faltering the rule would lead to claim rejection in the long run.

*All savings are provided by the insurer as per the IRDAI approved insurance plan. Standard T&C Apply

Conclusion :- It's better to be safe than sorry. You must be very honest and transparent while signing up for term insurance, especially when you are filling the proposal form. Not disclosing the eminent details could land you in huge trouble. Don't let your efforts and money go to waste. Be very vigilant while buying term insurance, give out as many details as possible. Be secured and assured!

Many life insurance companies offer term insurance plans without a medical exam. In these term insurance plans, the policyholder does not require to pass any medical test while buying the policy.  Considering the age of the policyholder and the sum assured amount as chosen by them the insurance company may not request the insurance holder to undergo the medical exam. However, if the policyholder has some-pre-existing medical problems or illnesses then they will have to go through the medial test while purchasing the policy.

In the world of actualities, eventuality does not come with prior notice. In a crucial phase of a novel coronavirus, the loss of the breadwinner of the family can be challenging and distressing mentally, emotionally and to a larger extent financially as well. Therefore, make sure that you have a coronavirus life insurance, which will be helpful in such a horrendous situation. Moreover, it is of prime importance that your insurer is immediately informed in case of any unfortunate incident. Giving correct information is important so that in case of any claim you do not have to face much hassle.

Written By: PolicyBazaar

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