REASONS WHY YOUR TERM INSURANCE CLAIM MIGHT GET REJECTED AND HOW TO PREVENT IT

Your life insurance claim has been rejected! Isn’t it the worst nightmare that can happen to your loved ones when you are not around? Even thinking about it sends a chill down the spine. As per the Data available from the Insurance Regulatory Development Authority of India (IRDAI), life insurance claim rejection is real, and not a hoax. If you don’t want your family to financially and emotionally suffer in your absence, you should take all measures required to ensure that your term insurance claim never gets rejected. But before we get to that, let’s understand term insurance plan meaning. A term insurance is a type of life insurance that offers coverage for a certain specified period of time. If the insured dies during the tenure, a death benefit is paid to their family, provided they meet all the conditions of the policy.

Now, let’s focus on the reasons why your term insurance claim may get rejected:

  1. Concealment of information
    This is one of the most common reasons for term insurance claim rejections. When you buy a term insurance plan, it is important to declare all the information honestly and clearly. If there is a deliberate effort or any mistake to withhold information, your family could witness serious repercussions in the future which could result in the rejection of your term insurance claim.
  2. Hiding the medical history
    Disclosure of existing and previous medical history is mandatory as it influences the premiums of the policy. Most term insurance plan calculators also require to highlight certain lifestyle choices such as smoking and drinking while computing the premiums.
  3. Your policy has lapsed
    One of the most important criteria for the approval of your insurance claim is that your insurance policy is still in force. Hence, it’s crucial to pay your premiums on time to avoid your term insurance to lapse. In case of non-payment of the premium due to any unavoidable reasons, the insured is given a grace period within which the policyholder could pay their premiums. However, if the premium is not paid within the grace period, the policy is bound to lapse.
  4. The policyholder suffered an uncovered death
    In case, the policyholder suffers the untimely death by a cause not covered in the policy, the claim will be rejected. Not all types of death are covered in the term insurance policy. So check with your insurance provider about the same. Life insurance claims could get rejected if the insured had been a part of hazardous activities or if they die of a pre-existing disease.
  5. Not updating or missed appointing a beneficiary or a nominee
    If the insured has missed to appoint or update the nominee details, the claim might become jeopardised. This could cause a delay in settlement of the claims or worse, might also lead to denial of the policy claim in some instances.

Thus, to avoid a messy situation of your insurance policy being rejected, ensure that you read the policy documents carefully and diligently. Also, do not withhold any information for your insurer. Update your insurer about any past or any existing medical history and if any previously held insurance policy. Do not try to withhold any information. It could work against you. Keep yourself up-to-date about the details in your insurance policy document. Don’t forget to stay well informed and diligent about the conditions under which your family would be eligible for a claim. Also, check the term insurance age limit provided by your insurance company.

Remember, life insurance is not just a tax-saving device, it’s a severe financial product which, if used suitably, can be a saving grace for your loved ones and dependants. Someone has rightly quoted, “Life is hard, and death is even harder”.