Lifestyle

Life Insurance Claims – Everything You Need to Know

Life insurance is meant to safeguard the interests of your loved ones in the time of need. But for this to happen, you need to claim it to reap the benefits of having insurance. Apart from the death claim, you also need to file for the maturity payout as your policy tenure starts coming closer to expiry. So, today find out everything about life insurance claims and some key reasons for claim rejection.

Types of Life Insurance Claims

There are two kinds of claims that a policyholder can make under a life insurance policy:

  • Death claim – This type of claim is filed in the event of the policyholder’s demise. The insurance provider then pays out the death benefit to the beneficiary after receiving the documents and confirming the claim.
  • Maturity claim – Such a claim is available for a life insurance policy that has a savings or investment component. Apart from term plans, many types of life insurance offer a maturity payout. The policyholder can claim this as the policy tenure is coming closer to expiry. The insurer shall pay out the maturity sum when the term ends.

How Are Life Insurance Claims Filed?

Here’s how the claim settlement process works and the lump sum benefit is paid out:

  • Step 1: Intimation

In case of a death claim, the beneficiary of the policy informs the insurer about the demise of the policyholder. With this, the claim process begins where you are required to offer certain details and fill out the claim settlement application. For maturity claim, a discharge form has to be submitted with the insurer a couple of months ahead of policy expiry.

  • Step 2: Document submission

For both death and maturity claims, specific documents are required to be submitted with the particular forms. On providing the right papers to support the claim, the procedure shall start. In case of a death claim, documents like proof of ID of the policyholder, death certificate, postmortem certificate, original policy papers, etc. are required. While for the maturity payout, you must submit a copy of your passbook, original policy papers, cancelled cheque, etc. If any other details are required, the insurer shall intimate you.

  • Step 3: Claim settlement

After receiving all the necessary documents, the insurance claim must be settled within 30 days, as per the IRDAI (Insurance Regulatory and Development Authority). This applies to death claims. In case the claim has to be investigated, the settlement period shall be extended to 90 days. Anytime beyond this time limit, the company is liable to pay interest on the death benefit. For maturity claim, the insurer shall contact you and the lump sum will be paid out on expiry.

Why Do Insurance Claims Get Rejected?

Below are some common reasons as to why life insurance claims get rejected:

  • Concealing personal details: Hiding information related to your family medical history, current health status, lifestyle habits, etc. can lead to an issue. In case the death is caused due to an ailment concealed from the insurer, your death claim will be rejected if the insurance provider doesn’t cover such a disorder.
  • Claim to fall under exclusions: In case your death claim falls under the exclusions of the plan or do not meet the terms and conditions of the policy, you are likely to face rejection. Thus, it is crucial to read your policy documents.
  • Failing to pay your premiums regularly: Your claim can also be delayed or rejected if you have defaulted on the payment or if the policy has lapsed. Hence, it is advised to never miss your due date.
  • Inputting wrong details: This can happen if you don’t fill your own insurance application and someone else ends up mentioning incorrect details. To avoid disparities in your form, you must be the one to fill out your policy application.

With this, you must have learnt what is life insurance, what a claim entails and how you can proceed with it. Ensure to go through the reasons why claims get rejected to avoid coming across such a situation. Therefore, it is recommended to read your insurance papers thoroughly and take advantage of the free look period. Understand the terms and conditions as well as the exclusions of the plan before signing it.

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