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Mr. Dhawan, a chartered accountant, was conducting an Insurance Awareness camp. During the question and answer session, he received this question:
"Mr. Dhawan, I wish to share a situation with you and look forward to your advice on the same. My uncle Mr. Vasu Malhotra, who is a senior citizen, and a widower, lost his son Dinesh a few days back.
Dinesh was in his late 40s and suffered a massive heart attack. He had two-term insurance policies and had listed his father as the nominee in one of those. However, one of the term insurance claims was rejected due to the non-disclosure of his heart condition. The premiums were being paid regularly. I want to know, can claims be rejected like this? And for what other reasons?"
Just like Mr. Dhawan, many of us unknowingly ignore some important dos and don’ts while purchasing a policy and may have to suffer a setback at the time of claims settlement. Hence, we are listing down the points that Mr. Dhawan shared with the audience so that your dependents would not face such life insurance claims rejections.
What are some of the Most Common Reasons for Rejection of Insurance Claims?
1. Incorrect Information in the Application Form
Misrepresentation of data can be detrimental to life insurance claims. You should fill in details such as age, income, occupation, qualification, lifestyle (smoking/drinking), information on previous policies and claims if any, and other information in the application form carefully and correctly. These are important factors in deciding the premium. Incorrect or incomplete data can also constitute to fraud and lead to the suspension of policy benefits.
2. Non-Disclosure of Medical History
Disclosure of previous and existing medical conditions, operations, surgeries, etc., is mandatory because it influences the policy premium. Most online term insurance premium calculators also require you to highlight lifestyle choices like smoking while computing the premiums.
Health details of family members, especially conditions like cancer, cardiovascular diseases, blood pressure, or any other hereditary conditions must be shared to avoid rejections of life insurance claims.
3. Not Filling the Insurance Proposal Form Yourself
Clients often sign a blank check and a proposal form and hand them over to an advisor for filling in the details. No matter how close, the agent will not know everything about your health history, finances and that of your family members. Be responsible; fill out the term insurance plan form yourself. This will also help you understand the life insurance policy better and choose the best features that suit your family's needs.
4. Not Updating Nominee Information
On the death of the life assured, the benefits are paid to the nominee or the beneficiary. It is, therefore, important to keep the insurance company updated about the details of the nominee, like their address, contact information, etc. Failure to do that causes trouble during the claim process and may lead to a rejection of your life insurance claim.
Moreover, choose your nominee wisely. A married person can nominate their spouse or children, while if you are single, then nominating your parents or any other family member would be a good idea. In case the nominee is a minor, a guardian also needs to be listed.
5. Policy Lapse Due to Non-Payment of Premiums
Claims are settled only for active insurance policies. In case you have missed paying the premium, the policy lapses after the grace period (which is a maximum of 30 days in annual premium policies).
In such cases, all previously paid premiums account for nothing. Set up direct debit facilities to ensure that policies do not lapse. Still, if you forget and a policy lapses, try to revive it by paying the prescribed fees. It’s worth your family’s security.
6. Not Disclosing Existing Insurance Policies
You must disclose all your existing life insurance policies (details like the name of the insurer, the sum assured, and policy number) while buying a new life insurance plan. Sometimes, people avoid mentioning this information only because they find it cumbersome to sift through old documents to retrieve specific details. Concealing such facts is one of the reasons why insurance claims may get rejected.
Max Life Insurance has a claim paid ratio of 99.51% (Source: Individual Death Claim Paid Ratio as per audited financials for FY 2022-2023) thanks to our quick and efficient claims process. We also have dedicated claims officers who handle your claims and ensure that valid claims are paid on time.
So, by ensuring that the above-mentioned steps are followed, you can safeguard your dependents, and make sure that they receive the benefits you planned for them. Click here to know more about life insurance plans from Max Life.
ARN:-Jun23/Bg/12J
