Why Your Life Insurance Claim Cannot Be Rejected So Easily

One of the major apprehensions that people have with a life insurance policy, in general, is the rejection of death claims. People fear that life insurance claim rejection is the norm.

However, that is not true. The claim ratio of Tata AIA Life Insurance is 98.02% for FY 2020-21,

The same is also true for all kinds of life insurance plans - term insurance, ULIPs, annuity plans, guaranteed¹ return plans, etc. This is mostly because there are rules and regulations in place to prevent the insurance companies from easily rejecting your claims.

 

Why was insurance claim rejection so common in the past?

A decade ago, there was a high chance of you getting your claim rejected due to the terms and conditions for the death that were set by the insurance companies. For example, accidental death and death due to substance abuse were not covered under the insurance policy. There was also a clause that stated death due to an airline crash will not be eligible for death claims. However, all the above clauses have now been scrapped, and now the policyholders have more rights than ever.

Why is it difficult to reject your death claim in the present?

The older laws have been replaced with laws that benefit the policyholder. Your family will only have to furnish the death certificate along with the post-mortem report to start the claim procedure. They will not have to justify the circumstance surrounding the death.

There are also laws that ensure speedy disbursement of the death claim funds. The insurance companies will have to raise the need for all the documents within a fortnight of getting the intimation. Once all the documentation has been completed, the payout must be done within 3 months.

If the insurance company is willing to launch an investigation into the death, they will be allowed 90 days to come to a decision. The death claim payment is made within 30 days after the decision or end of the 90 day period, whichever is earlier.

 

Reasons why you can still get your claim rejected

Here are the top life insurance claim rejection reasons

• Falsification of medical documents
  

Before you can get your policy approved, you will have to provide the insurer with a medical certificate. The insurance company will decide a premium rate depending on the evaluation of medical records amongst a few other criteria.

If you falsify the documents, there is a good chance that your policy will be rejected. And if the death happens within 3 years due to the undisclosed disease, then the insurance company has the right to forfeit the death claim benefits.

• Contestability period
  

Once the policy has been approved, the contestability period starts. The insurance companies have the right to contest the death claims if the death happens under dubious circumstances. They can also cancel the insurance policy and forfeit the entire premium amount if the insurers find about the falsification of documents.

However, the new rules by IRDAI state that the contestability period only lasts up to 3 years, after which the insurance companies cannot contest the death claims.

• Botched details about the nominee
  

If the details about the nominee are incorrectly filled, then there is a high chance of rejection of the claims. Therefore, you must carefully fill the documents and provide the insurer with all the necessary ID proofs.

• Irregular payment of premiums
  

The policy will lapse if you stop the payment of your premiums. In the case of a lapsed policy, the insurance company is not liable to pay the death claims. Similarly, if you do not pay the premiums for your guaranteed¹ return plan in India, then promised returns can be forfeited. If the policy amount has lapsed for more than 6 months, then the insurance company can deny renewing the policy. If the insurance companies renew the policy, they have the right to increase the amount of premium. 

 

Your duties as a policyholder to avoid cancellation of the policy

• It is your duty to provide the insurance company with all the necessary documents as and when they are required.

• It is your duty as the policyholder to provide them with true and fair medical tests. You will also have to disclose your smoking habit if you are a smoker.

• It is your duty to ensure that all the details about the insurance policy and the details about your nominee have been correctly filled.

• You will have to pay your premiums regularly, without any interruption.

• If the policy lapses due to non-payment, then it is your duty to renew the policy with fresh payments. You will get a grace period of 30-45 days after the due date of your premium amount.

• Declaring other life insurance policies owned.

Conclusion

With the introduction of the new rules, it has become infinitely more beneficial to get an insurance policy for yourself. The IRDAI will keep on changing the rules and regulations of the insurance policies to ensure that the policyholders are benefited. Therefore, you won’t have to worry about getting your claim rejected.

One of the effective ways to avoid claim rejection is to opt for the best guaranteed¹ return plans in India. The plans can either be used to achieve your short term goals or create a long term retirement fund, along with life insurance policy coverage.

Check out the Savings Solutions from Tata AIA Insurance for plans with guaranteed¹ returns. Get guaranteed¹ returns with the option of monthly income, lump sum amount or whole life benefit. The life insurance policy cover can be used for your spouse as well under the whole life benefit plan.

You can visit their website to learn more about the guaranteed¹ return plan.

 

L&C/Advt/2021/Dec/2126