When you buy a life insurance policy, you ensure that your family’s future will be secure and that they will be able to handle their financial obligations without any hassle. Hence, when you, the owner of the life insurance policy, happen to pass away at any point in time within the policy term, your family will be able to receive the predetermined sum assured.
Fortunately, the coverage of a life insurance policy is effective immediately after the policy has been purchased, which makes it possible for the late policyholder’s family to file a claim and get the payout benefit. Most people are, however, unaware that several policies do cover deaths in the first policy year. Therefore, here is a quick guide on what can be done if the policyholder passes away soon after you buy a life insurance plan.
Steps to Take After the Insured’s Death
Most life insurance policies enable death benefit payouts in case of the policyholder’s demise within the first policy year. This will also depend on the nature of the death, and there may be further investigation by the life insurance provider’s claims department. However, here is what you can do to ensure that the claims process is hassle-free:
- Collect the Death Certificate
On the death of the insured, be sure to collect the death certificate as well as a letter from the examining doctor. This document is most important in the legal sense since it will record the time, cause, and date of death, along with the name of the hospital and the contact details of the examining doctor. If the insured has not died due to natural causes, this document and the letter can save a lot of time for your insurer and you.
- Get in Touch with the Insurer
If you buy a life insurance policy online, your insurer can be contacted online. Since emails may take a while, you can write one to keep a record after getting in touch on a call. Let them know about the deceased policyholder and any other details that are needed to arrange the claim. Some families may not be aware of who the life insurance provider is; in this case, they should contact the National Association of Insurance Commissioners (NAIC).
- Filling the Claims Form
The claim form is the most important part of the claims process and should be filled out with the right details. If the insured has died due to unnatural causes or an accident, ensure that you write that correctly. One of the beneficiaries or the nominee will have to do this and ensure all the necessary documents are submitted for the claims process. No unauthorised party should fill out this form; this is done to avoid the submission of inaccurate details.
- Allow the Insurer to Review the Claim
Though most claims can be reviewed in a couple of weeks or so, as per regulatory guidelines, life insurance companies can take up to 30 days to review a claim, while for an extensive investigation, for example, in the case of death by suicide, this timeline can be increased to 90 days. However, at the end of the review, the insurance provider can choose to reject the claim form if there is incorrect or incomplete information in the claim form.
Here, we guide you along every step of the claims process so that your documentation can be up to date and the claim form can be filled correctly. This greatly reduces the chance of your claim getting dismissed.
Reasons for Rejection of the Claim
It is necessary to file the death claim in the correct way to get life insurance benefits. But a number of claims can get rejected due to reasons one may not have considered before buying the life insurance policy. These are three of the most common reasons why your claim may get rejected:
- Incorrect Information: Most of the time; it is wrong or incomplete information that leads to claim rejections, which is why you should recheck and confirm every detail you provide on the claim form.
- Missing Documentation: Always provide every required document as requested during the claims process. Even something like a hospitalisation bill could be crucial for the insurer and hence, affect the disbursal of your claim.
- Poor claim settlement ratio1: When you buy a life insurance policy in India, your insurer’s claim settlement ratio is of utmost importance for claim settlement. Only choose a life insurance company with more claim settlement ratio.
Knowing that death is as unpredictable as life, buying a life insurance policy is advisable at the first opportunity. But it is equally important to educate your family on the claims process and prepare them for the worst in case your death occurs soon after the policy purchase. In many situations, life insurance companies may want to conduct a detailed and comprehensive inquiry which can lead to added mental stress for your loved ones in case you pass away shortly after purchasing a life insurance policy.