More often than not, people complain of their term insurance plans getting rejected. Either they shift the blame on the insurance company or feel broken in front of financial distresses. But have you ever thought about why insurers actually reject your term insurance claims? Are there any valid reasons based on which insurance companies take such strict actions? Read on to know what makes your term insurance claim weak and vulnerable. Also, you will get to know how you can strengthen your claims.
What Is a Term Life insurance plan?
A term insurance plan is an uncomplicated version of life insurance policies. These plans are extremely beneficial in offering financial assistance to your loved ones in your absence. The nominee can request the insurer to pay the death benefit sum assured after the demise of the insured person.
Note: There is no maturity benefit payable when it comes to term life insurance plans.
Why Do You Actually Need A Term Life Insurance Policy?
- Lifestyle risks: Lifestyle diseases are common in today’s time. Most the people are addicted to bad habits like smoking and drinking. These diseases tend to show up and attack your body with your increasing age. Certain term insurance plans offer critical illness benefits to the policyholders. So, you get coverage against severe health conditions like heart attack and cancer.
- Financial stability for your family members: For every primary earner or sole breadwinner, term insurance plans can bring much value and peace of mind. This is so because, after your demise, the plan will keep your family financially secured. They won’t have to face financial distressful times in your absence.
- Secure your valuable assets: A term insurance plan can help your family in repaying any kind of loans that you might have taken in your lifetime. They won’t feel burdened under the pressure of repaying your loans.
Reasons Behind Term Life Insurance Claim Getting Rejected
- Sharing incorrect information: Trying to misguide the insurance company by providing false details while filling out the form can prove to be detrimental to your term insurance plan. As a policyholder, you are required to fill in details such as occupation, age, lifestyle habits, previous policies etc. correctly. All these details will be considered while calculating your premium. If the insurance company discovers that you have shared wrong information with them, they can get your plan lapsed and also charge a case of fraud on you. Also, if they find this out after the nominee raises the claim, the insurance company can straightaway reject the claim.
- Non-disclosure of medical history: If you have any medical condition or have undergone any surgery or operation prior to buying the term insurance plan, you are required to share the details with the insurer. These details will impact your policy premium. If you check different online term insurance premium calculators, you will be prompted to share details like smoking and drinking habits so that they can compute the premiums accurately. Also, you must share details of any hereditary conditions or critical illnesses with the insurance company.
- Avoiding medical tests: If you are eyeing a considerably high sum assured, then there will be certain mandatory medical tests that you are required to undergo. If you refrain from taking such tests, the insurance company can reject your claim.
- Policy getting lapsed: A lapsed policy offers no coverage or benefits. If you have failed to pay the premiums on time, then there is no use in filing a claim for your lapsed term insurance plan. Make sure you pay the premiums within the due date or make the most out of the grace period offered by the insurance company. Anything beyond that can lead to claim rejection.
- Non-disclosure of old insurance policies: If you have bought multiple policies and are not aware of the policy declaration rule, then it is highly likely that you won’t mention your previous plans and policies while getting yourself a term insurance plan. But you must understand that insurance companies are extremely strict when it comes to policy declaration rules and norms. If you fail to inform your ULIPs, terms plans and traditional policies to your term insurance plan insurer, they can reject your insurance claim.
- Let the agents fill out your insurance proposal form: Purchasing a term insurance plan is a significant life decision. So, you must take time out to fill in the details in the form all by yourself. Never ask an agent to fill in the details on your behalf. If you get it done by an agent, there remains room for errors. And even a minute mistake can lead to claim rejection.
- Not mentioning nominee details: Always update the nominee details so that while they claim for the sum assured after your demise, the insurer can easily access information like the nominee’s name, address, contact number and so on. If the details are missing, it is bound to create misunderstanding and confusion, which can further pave way for claim rejection.
How Can You Avoid Term Life Insurance Claim Rejection?
- Provide correct information only: Do not try to mislead the insurance company and always share the correct details with them.
- Fill out the form by yourself: The term insurance plan aims at securing your family financially when you are not around for them. It is therefore your duty to fill in each of the details by yourself to avoid even the slightest chance of mistake.
- Keep the beneficiary aware of the term insurance claim process as well as required documents: Your nominee should be aware of the term insurance plan that you have bought Make him/her walk through the claim filing process. Also, let the nominee know about the documents that are required for claim filing and approval.
- Timely payment of premium: You must pay the premiums on time so that the term insurance plan does not get lapsed.
- Share nominee details: Do not forget to share the policy details with your insurance company.
- Undergo mandatory medical examinations: You ought to undergo all the compulsory medical tests that are mentioned by the insurance company.
If you are planning to buy a term insurance plan, then this blog will come in handy. Go through each and every detail and abide by the norms and regulations so that after you, your family do not suffer financially due to claim rejection.