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How to Avoid Term Insurance Claim Rejection?

Term insurance plans are essential for everyone as they help you protect your family in case of your unfortunate death during the policy term. This payout can help your family maintain their current quality of life, pay their rent, pay for child’s fees, and take care of any other financial responsibilities. However, the entire benefit amount can only be useful if the death benefit is paid to your family in times of need. You need to ensure you buy term plan from an insurer that won't reject your family’s claim. 

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Note: Know more about what is term insurance first before reading this article.

Let us see the term insurance claim rejection reasons and how to avoid term insurance claim rejection:

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Why Term Insurance Claim Gets Rejected?

Here is a list of the various reasons for rejection of term insurance claims:

  • Error or Mistakes in Form: Your term insurance claim may be rejected if there are any errors on the application form. Mistakes in your name spelling, age, gender, income, occupation, address, or phone number can get your term insurance claim rejected. 

  • False Information Provided: Giving false or missing important information regarding health conditions and medical history is one of the main term insurance claim rejection reasons. 

  • Confusion in Policy T&Cs: You need to make sure to go through the policy T&Cs thoroughly to avoid any confusion during claim submission. 

  • Non-payment of Premiums: Not paying premiums on time or before the end of the grace period can be one of the reasons for rejection of term insurance claims as the policy gets canceled when premiums are not paid in due time. 

  • Missing Nominee Details: If the nominee or the beneficiary of the term insurance is not properly named, details are not provided, or if incorrect details of the nominee are provided, your term insurance claim can be rejected.

  • Omission of Information: You need to make sure that the insurer is aware of your lifestyle like smoking or drinking alcohol habits, participating in risky sports activities, or being involved in any criminal activities can get your term insurance claims rejected. 

  • Undisclosed Existing Policy: It is important to completely disclose your current and previous insurance plans when buying a term plan. Failure to do so can lead to the rejection of your insurance claim. This information is necessary for the insurer to conduct a thorough risk assessment. 

  • Committing Fraud: People who commit fraud by buying term insurance policies for people who are terminally ill or already dead, the insurer might reject their term insurance claims.

  • Death Due to Exclusions: In case the policyholder dies due to a reason not covered under the policy, the insurer may reject the term insurance claim in that case as well. This could be suicidal death in the 1st year of the policy, death due to drunk driving, or death due to participation in adventure sports or criminal activities.

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How To Avoid Term Insurance Claim Rejection?

Let us take a look at how you can avoid your term insurance claim from being rejected

  • Disclose Accurate Information: You should make sure to give accurate information to your insurer while filling out the application form to the best of your knowledge to ensure that your term insurance claim is not rejected.

  • Fill out the form carefully: Always fill out the application form yourself to avoid any mistakes in names, contact details, age, gender, occupation, and annual income.

  • Pay the premiums on time: You need to pay the premiums on time before the due date or within the grace period as missing paying premiums will lapse the policy.

  • Keep the Nominee Details Updated: Make sure to keep the nominee’s details updated in your term plan as your nominee will be contacted on the information provided by you.

  • Comprehensive Life Cover: When you buy term plan make sure to buy the policy with the most comprehensive life cover that provides coverage against death due to various reasons. 

  • Buy plans from insurers with high CSR: Always make sure to compare the Claim Settlement Ratio of term insurance before buying. You should buy a term plan from an insurance company with a CSR of more than 95% as the company with a consistently high CSR has a better chance of settling your claims.

  • Grievance Redressal Mechanism: If you think that the insurer has rejected your term insurance claim without a valid reason, you can get in touch with the Grievance Redressal Officer. If, somehow, Grievance Redressal doesn’t help as well, you can contact the IRDAI for a fair judgment.

Points to Remember While Submitting the Term Insurance Claim Form

Here is a list of all the points you need to remember while submitting the term insurance claim form.

  • Informing the Insurer
    You must inform the insurance company about the death of the policyholder and submit the claims form. You can download the claims form from the website or visit the company office. Then, you need to fill out the form accurately and without any errors.

  • Submission of Documents
    Make sure to attach all the mandatory documents, like death certificates, medical reports, and original policy documents, to get your claim settled as soon as possible. You also need to make sure that you provide accurate and up-to-date nominee details.

  • Verification of Claim
    After the accurate submission of the claims form and the required documents, you need to wait for the insurance company to verify the details you provided. On successful verification, the insurer will payout the sum assured to the nominee's account.

Documents Required For Term Insurance Claim Settlement

Let us take a look at some of the Documents required to file for term insurance claims:

  • Original policy documents

  • Accurately filled claims form

  • Original and copy of death certificate

  • Hospital and medical records of the death

  • Nominee’s identity and address proof

  • Bank passbook details

Wrapping it Up!

There may be some reasons for rejection of term insurance claims, but the best way to ensure that your claim does not get rejected is to provide all the correct documentation and accurate information. You can submit your claims form both online and offline.

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