Reasons for your Term Insurance Claim Rejection

Reasons for your Term Insurance Claim Rejection

The insurance companies have a fixed set of rules while settling the term insurance claim request. And, in case of non-compliance, they reject the claim. Read on to know more about the top reasons why the claim gets rejected.

Buying a term insurance policy is one of the best ways to secure your family from the financial hassles that may befall on them when you are not around. But, what if the family does not get the policy benefits or the compensation they are supposed to receive, and their claim is rejected? The grief of losing a family member coupled with the stress of financial liabilities could bring your family’s world upside down.

You would surely not want your family to go through such adversities during a tough time. So, as a policy buyer, you must understand the reasons why your claim can potentially be rejected and do everything you can to avoid this situation for the family in the future.

Some of the most common reasons why insurance companies reject term insurance claim requests are discussed below.

Providing inaccurate details or hiding details while buying the policy

One of the most common reasons cited by the insurance companies in India for term insurance claim rejection is providing inaccurate information by the policy buyer. Many people tend to provide false information in the policy application form and try to hide their health status to get the policy at a lower premium. However, most people understand that such practices are determinantal while filing a claim in the future.

Details relating to age, qualification, profession, lifestyle habits, health status, etc. must be mentioned correctly. These factors help the insurance company to determine the policy premium. If there is any discrepancy in the information provided, the insurance company will reject the claim on the grounds of non-compliance of the policy terms.

Not providing beneficiary details

In term insurance, the death benefits are paid to the beneficiaries or the policy nominee. Hence, it is vital to mention the nominee details such as name, age, relation, address, contact information, etc. at the time of buying the policy. If you want to appoint more than one nominee, you can do so. You can also define the percentage of the death benefit amount each nominee should receive.

Suppose if you have not mentioned the beneficiary’s name in the policy documents, it can cause trouble to your family to get the benefit and the claim will be rejected.

Premiums not paid

Another popular reason why insurance companies reject the term insurance claim is that the policyholder failed to pay the premium. Remember, the insurance claims are settled only if the policy is active; you cannot file a claim if the policy matures. Similarly, if you have not paid the premium even after the grace period, the policy automatically lapses and the premiums paid before goes waste. Not to mention, your family will not receive any benefits.

So, to avoid this unwanted and unpleasant situation befalling your family in the future, you must be aware of the premium due date and make the payments diligently.

Type of death

Remember, the term insurance policy has certain permanent exclusions; it does not cover all kinds of death. For example, the term insurance plans in India do not cover death due to suicide, death occurred due to substance abuse, or death due to involvement in risky and adventurous activities like bungee jumping, skiing, river rafting, etc. So, if the policyholder’s death occurs due to any reason that is stated as exclusion in the policy, the insurer has the right to reject your claim.

Final Word

While buying a term insurance policy, you must be aware of the reasons for rejection and ensure that you do everything right so that your family does not face any problems.

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