Decoding Insurance

5 Ways to Avoid Term Insurance Claim Rejection

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The primary objective for anyone purchasing insurance is to ensure that they are financially protected in the event of an accident or an unfortunate situation.  A term insurance plan does just that for you, it covers you for a certain period of time, or term, and is one of the most cost-effective options available today. After the policyholder dies, the nominee receives the money promised in a term life plan. Its goal is to offer a safety net for the deceased's family and to secure their future financial needs. It serves as a tool to help offer financial security to a person's family in their absence. Term life insurance provides death benefits in the form of the sum assured, which is paid to the policy's beneficiaries. 

However, a small mistake can result in insurers rejecting claims made by the nominees. There are  several terms and conditions/insurance jargons in the policy document that the policyholder overlooks when purchasing the insurance policy, but it is the policyholder's sole responsibility to thoroughly review the policy documents and procedures in advance and not give the insurer any reason to reject your claims.

And, what happens if your claim is rejected? Your family's entire world can be turned upside down. Firstly, there is the pain of losing a close family member and secondly the worry of future financial responsibilities, especially if that person is the sole breadwinner of the family. You certainly don't want to face such difficulties at a time when things are already challenging. To avoid such unprecedented situations, It's critical to understand what can lead to a claim being denied. 

1.  Complete Disclosure of information 

"Concealment of information" refers to any piece of information you don't (or forget) to notify your life insurance company that could affect your health or result in a medical condition that needs hospitalization or the payment of a death benefit. Any disease or condition that demands a life insurance claim will be linked to anything on your application form that shows this illness or disease was a possible risk. Also, any pre-existing disease or unhealthy lifestyle choices like smoking/ drinking habits, or anything else that could be linked to your hospitalization or death will be investigated, and if you haven't told the insurer about it, you won't get the promised sum assured and other benefits.

Moreover, people who enjoy high-risk activities like skydiving, deep-sea diving etc should notify their insurers whenever applying for a term plan. This will allow the insurance company to evaluate their situation better and accordingly choose the most suitable plan for them with reasonable premiums.

2. Paying premiums on time 

It goes without saying that you must pay your premiums on time to avoid your coverage expiration and continue to receive benefits. Insurance companies usually provide a grace period for paying premiums in the event that the insured has missed one, but it is still best to prevent depending on this grace period and instead make the payments in advance.

3. Update nominee information 

A nominee is a person who will be entitled to all of your term insurance policy's benefits. If you're single, naming your parents as nominees is a good idea; if you're married, selecting your spouse or children as nominees is a good option. Nominees are those who rely on you being healthy and active. 

4. Make sure you file your insurance claims as soon as possible

Insurance companies have standard guidelines for the claims reporting period, which means that the insured, nominee, or dependents must file a claim within a certain timeframe. Though when an emergency strikes, filing a term insurance claim can be the last thing on your mind but a  quick call to the insurer, on the other hand, could make a huge difference. The process will be smoother if you notify the company as soon as possible. 

5. Filling up the form on your own

Do not rely on anyone to take responsibility while filling out the application form. As, based on the information you provide on your forms, insurers determine the amount of your premium payment, overall coverage, and even some exclusions. Simply telling the insurance agent or any third person your entire medical history will not qualify him to understand and explain the more complicated aspects of your health records on the form. Hence, it’s crucial to take your time and fill out documents properly by yourself. 


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