Purchasing a life insurance policy is one of the smartest decisions you can make to safeguard the financial future of your loved ones. This is because such a plan is designed to provide policy beneficiaries with benefits such as long-term financial protection, maturity benefit, if applicable, and options to plan and customize plan coverage as your insurance needs. Typically, a life insurance policy aims to offer financial support to the insured’s beneficiary in the form of a sum assured in case of their sudden death due to a reason covered under the insurance plan. This financial help to assure family members are well taken care of and do not have to become financially dependent to maintain their living standards. However, in some cases, you may see policy beneficiaries facing claim rejection, which leaves them without any financial support in the absence of their family’s sole breadwinner. Needless to say, this defeats the entire purpose of getting a life insurance policy in the first place and jeopardizes the financial future of the dependents. However, a clear understanding of the common reasons behind denials can help you avoid claim delays or rejections. So make sure to keep a track of these following mistakes.
Avoid these mistakes when filing a life insurance claim
Typically, you will find these mistakes delaying claim settlement or triggering rejections. So, you must understand them and find out more about them in detail to prevent unpleasant situations.
Non-disclosure of medical conditions
One of the most common reasons for insurance claim rejection is non-disclosure or withholding crucial health or lifestyle-related information when getting an insurance. Withholding information like medical history, pre-existing health conditions, and lifestyle habits such as smoking and drinking are solid grounds for claim rejection. This is because most insurance companies factor them to gauge your risk when you apply for a policy and determine suitable premiums as per your needs and risks. So, not sharing complete details can result in inaccurate risk, coverage, and premium calculation. You should think of information you share as an NSC interest rate, without which you cannot determine your maturity amount or interest earnings. When the insurer finds the inaccuracy of information, especially during the policy claim verification process the discrepancy could lead to rejection. Hence, it is advised that you provide all essential details regarding health, lifestyle patterns, and existing illnesses to ensure your dependents can access the required financial help.
Policy lapse because of non-payment
Non-payment of premiums for a long time can lead to the discontinuation or lapse of your life insurance policy. However, a policy will lapse only after you fail to pay premiums after the grace period the insurer allowed, following which your policy is bound to get canceled.
In such a situation, your financial protection will cease to exist, which means insurance companies would not be liable to settle any death claims filed by your beneficiaries, leaving them without a cover to rely on. This is why you must pay your premiums on time, and consider setting autopayment feature.
Condition for the claim comes under exclusions
Each insurance product accompanies specific guidelines that offer clarity about what the policy will cover and what is excluded. Individuals have to be mindful of these exclusions as they state circumstances and situations where beneficiaries won’t be able to access the sum assured. Some of the most common exclusions include suicide within the first year of buying the policy, pre-existing health condition-induced death, death due to indulgence in criminal activity, or the situations mentioned by the company. Often individuals do not read the fine print regarding exclusions and coverage. It is not until their claim gets rejected that they realize the situation was not covered in the policy. Hence, it is encouraged to take time to understand the coverage and exclusions in detail to gauge the plan’s viability.
Death during the contestability period
The first two years after applying for a life insurance policy is the contestability period. When an insured dies during this period the insurance provider may investigate the claim and information shared during the application process.
In case the insurance provider funds any misrepresentation or discrepancy in information, they can outrightly deny the claim. Notably, the process may vary from case to case. Hence, it is important to provide accurate personal, health, and financial details at all times when applying for an insurance product.
Incomplete or different information on the policy application
Carelessness while filing insurance application forms can cost dependents their claim. Documents and information provided by the insurance buyers serve as the pillars of an insurance policy and its scope. Incomplete information, incorrect details, or information that is not uniform across documents may create issues during the claim verification process. It can delay the verification process or lead to claim rejection. Hence, it is very important to ensure that the documents you submit do not have spelling errors or missed fields.
Not submitting relevant documents
Documents that support insurance claims and serve as evidence for cases related to death due to accident or injury are crucial for the verification process. Every insurer has a list of documents they require to initiate the process, and not submitting them on time could delay the process or lead to rejection. It is important that individuals find out the required set of documents beforehand and then apply for the claim to ensure speedy verification and claim settlement.
Besides these, it is important to inform the insurer about the death or accident as soon as possible, preferably within 72 hours of the incident. Not conveying the same could lead to claim rejection. It is important to find the permissible window from the insurer in advance. It is equally important for the insured to keep their beneficiaries and family members aware of the key requisites so that they can calmly streamline the process when required.
Hence, by taking care of these things you can lower the risk of claim rejection and ensure their loved ones are financially protected. However, if you believe your claim has been rejected without proper reason you can seek redressal from insurance grievance platforms or consult professionals with expertise in this field.
