Why Term Plan Claim May Get Rejected?

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We always take measures to keep our loved ones safe and their future secured. This is the reason why we part our saving with these term insurance plans so that our family members never face the financial distress.

But what if every month we keep paying the premium on time and in the end, our loved ones fail to get that amount? One has already lost a person and now they are losing their hard earned money as well. Certainly, nobody wants to go through such a crisis in the most difficult time of their life. In order to prevent such a scenario, it is better to understand a few things that can lead to rejection of the policy.

The insurance company and client relationship not only relies on the belief system but on vital information and facts. Providing them with information is as important as choosing the right policy. At the same time, one should look at the figures of policy claim ratio and take opinions from the experts before deciding on the term plan.

Let’s have a look at possible reasons that can lead to rejection of the policy claim.

Casual attitude for the insurance policy

We all know what a tedious task it is to apply for the insurance policy. It involves a lot of patience, full attention, and the ability to read between the lines of the document. Often we are so fed up with the whole process that we casually read the documents or hire an insurance agent to get the job done. Giving up the responsibility of the future of your loved ones to a total stranger is unjustified to them.

Just signing on the document and freeing up ourselves from the task is what can lead to policy rejection later on. The agent doesn’t have any clue about the medical history of the family and may fill incorrect or income details in the proposal form. After all, he is just an agent who wants to sell the maximum number of policies in the minimum time.

The policyholder should ensure that the form is filled by himself/herself and make sure to keep a copy of it. Also, verify the details on both- the printed document and the copy that you have. If any discrepancies are found, just contact the authority to get the corrections done.

Mentioning incorrect information in the form

When opting for the insurance policy, never hide any details from them. In fact, mention the smallest details so that it doesn’t come to bite you in future. Hiding important information from the insurance company is one of the major reasons for policy rejection.

If one is holding other insurance policies, they should mention about it in the form. Always mention the exact details of all the term plans one possesses. This will save you from the rejection of the claim in the future.

Nature of Job

Insurance companies classify different job according to the risks they hold. The nature of the job that you do is quite important for them to know. Jobs like- mining, firefighting, working in chemical factories are considered to be risky. If the job is life-threatening or involves high risk, you will be notified about the eligibility for the insurance policy.

This vital information should be passed on to the insurance company so that nothing is hidden from them.

Giving incorrect information about medical history

The insurance companies strictly believe in knowing about the every minute details of the health of the policyholder. This is of great concern for them as it is the basis of acceptance or rejection of the policy.

The medical history of the policyholder should be correctly mentioned in the proposal form. On the basis of this information, the amount of premium will be decided. The form asks about the medical history of each family member. If somebody has a habit of smoking or drinking, it should be clearly mentioned in the form. Avoiding such important facts can prove troublesome in the future.

Death during contestability period

When buying a term plan, one research certain about the insurance policies. Contestability period is one of those things. Contestability is the period in which if a death occurs, the claim for assured sum will get rejected.

The contestability period generally ranges from 1 to 2 years and varies from company to company. In case of death during this period, the investigation will be undertaken by the insurance policy and they can reject the insurance claim.

Nature of death can be a big cause in getting the assured claim accepted or rejected. Committing suicide is outside the parameter of life insurance and the claim will definitely get rejected. This will not only bring grief to the family but also put them in financial distress. It is best to go through the documents carefully and examine the details related to the contestability period.

Appointing Nominee

Initially, when buying the insurance policy, the policyholder has to appoint a nominee who can accept the claim. Often later in life, when some major changes take place in our lives and some people may come and go, we forget the about the name of the nominee we mentioned in the insurance proposal form.

Life Insurance policy is something that needs to be taken seriously and needs constant updating of the facts from time to time. One cannot afford to miss updating the details of the nominee to the insurer.

Doing this will guarantee that once all the formalities are done, the nominee will receive the insured sum without any trouble. Insurance policy claims are transferred only to nominees or legal heirs.

Avoiding important medical tests

If the policyholder opts for the higher sum insured, he/she may have to go through certain medical tests. This is because the claim amount involved here is quite high and the insurer wants to gather all the information about the health condition of the policyholder. For instance, if an individual tend to buy HDFC term insurance, s/he has to undergo certain medical examination so that the insurer knows his/her health condition.

Avoiding these tests will only increase the chances of rejection of the claim. So it is better to get the tests done within the specified time.

Untimely payments responsible for Policy Lapse

We think that our job is done once we get the desired insurance policy. But this is only the half job done. Paying premiums on time and getting the term plan renewed is as important as applying for the insurance policy. One should remember to pay the premiums before the due date in order to avoid any hurdle later.

Many companies also provide the grace period for a few days after the due date. This is an added advantage for those who are often careless in paying premiums on time.

It mainly means that the policy no more exists. The company no more recognizes the policy. If one files for the claim of such a lapsed policy, this will only lead to rejection.

One should set necessary reminders for timely payment of premiums. If the policy is not renewed on regular basis, this can lead to policy Lapse. Policy Lapse is that unwanted thing which will lead to sure shot rejection of the claim.

Non-Disclosure of existing insurance policies

Many people opt for a number of insurance policies. However, they are unaware of the one most important fact- Not disclosing about the other insurance policies. It is mandatory to mention the existing policies to the insurer.

Many policyholders deliberately do not disclose the essential details about the old insurance policies while they are some who accidentally misses on this information. People who think they can save themselves from this problem, later on, are quite wrong.

Insurance Companies are not fools. They have everything in place to find out this vital information from their sources. These companies strictly adhere to their rules and regulations and it is of utmost importance to declare about the other insurance policies.

It is not important whether a person is insuring for a smaller assured sum or a bigger one. This condition is applicable to all type of policyholders to declare about their previous policies before opting for a new one. If one is not interested in getting their claim rejected, they should strictly comply with this rule.

Conclusion

Transparency and honesty are two pillars of a strong life insurance policy. One is risking the lives of their loved one with the insurance policy. It is of no use if the claim gets rejected later due to some petty issues which are avoidable. If one keeps in mind these important facts, the chances of claiming the assured sum will only get strong.

Why waste precious time and hard earned money because of a few avoidable things. One has to be absolutely transparent and honest when they are filling the proposal form as they are when visiting a doctor. Lying and concealing facts will only make the matter worse and increase the risk.

Good research, careful reading, and giving out the maximum information can save you and your loved ones from a lot of stress. Better be safe now than being sorry later.

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