Why It Is More Difficult to Have Your Life Insurance Claim Denied
One of the biggest issues that people have with life insurance policies in general is the denial of death claims. Many fear that it’s normal to have a life insurance claim declined.
But that is not accurate. The insurance claim ratio for the 2020–21 fiscal year is 98.02%.
This also holds true for all types of life insurance plans, such as term insurance, annuity plans, ULIPs, and guaranteed1 return plans. The laws and regulations put in place to prevent insurance firms from arbitrarily rejecting your claims are mostly to blame for this.
Why did insurance companies used to deny claims so frequently?
Ten years ago, you stood a good chance of your claim being denied due to the terms and circumstances for death set by the insurance companies. For example, accidental or drug-related deaths were not covered by the insurance. There was also a clause stating that death claims from aircraft accidents would not be honored. However, the previously mentioned clauses have been eliminated, providing policyholders with additional rights.
Why is it so difficult to reject your death claim at this time?
The prior laws have been replaced by ones that benefit policyholders. Your family only needs to submit the death certificate and the post-mortem report to start the claim procedure. They won’t have to justify the circumstances surrounding the demise.
Laws also ensure that the money from the death claim will be distributed promptly. The insurance companies must bring up the requirement for all of the documentation within two weeks of receiving the notification. When all the documentation is completed, the payout has to be made within three months.
The insurance company will be given ninety days to decide whether or not to investigate the deceased. Within thirty days following the decision or, if sooner, at the end of the ninety-day term, payment for the death claim is made.
Reasons the claim may still be rejected
These are the primary justifications for rejecting claims from life insurance.
- Medical record forgery
Before your insurance is authorized, the insurer will require a medical certificate that you provide. The insurance firm will evaluate medical records among other things before determining a premium amount.
If you falsify the documentation, you face the possibility of having your coverage rejected. In addition, if a death occurs within three years of disclosure and the reason of death is an illness that is not yet recognized, the insurance company has the right to refuse payment for death claims.
- Time frame for contestability
After the policy is approved, the contestability period starts. The insurance companies have the right to contest the death claims if there is uncertainty regarding the circumstances surrounding the death. The insurers may also be entitled to cancel the policy and forfeit the full premium amount if they find that the documents were faked.
The new IRDAI laws limit the contestability period to three years, after which the insurance companies will not be able to contest death claims.
- False information regarding the nominee
In the event that the nominee provides incorrect information, it is likely that the claims would be rejected. You must therefore carefully fill out all the paperwork and give the insurer the necessary identification.
- erratic payments of premiums
Your coverage will terminate if you stop paying the premiums. If a policy expires, the insurance company is not liable for paying death claims. Similar to this, if you don’t pay the premiums for your guaranteed1 return plan, you risk losing your guaranteed returns in India. If the policy amount has expired for more than six months, the insurance company may decline to renew the policy. If the insurance companies choose to renew the policy, they could increase the premium.
What you must do as an insured to keep your insurance from terminating
- It is your duty to promptly submit to the insurance company all pertinent papers.
- It is your duty as the policyholder to offer them unbiased and reliable medical tests. You will also need to disclose your smoking behavior if you smoke.
- It is your duty to ensure that all information pertaining to the insurance policy and your nominee has been correctly completed.
- It will be your duty to make regular, on-time premium payments.
- If the insurance expires due to nonpayment, it is your responsibility to renew it with new payments. The day that your premium payment is due will come and go in a span of thirty to forty-five days.
- stating that you have other life insurance plans.
To sum up
Since the new rules were put into place, getting insurance for oneself has become even more attractive. The insurance products rules and regulations will be amended by the IRDAI in the best interests of policyholders. As a result, you won’t have to worry about your claim being rejected.
One of the best ways to avoid having a claim rejected is to select the best guaranteed1 return plans that are offered in India. The plans can be utilized to assist you achieve your short-term goals or to establish a long-term retirement fund because they include life insurance coverage.
Check out Savings Solutions from Insurance for guaranteed1 profits on your insurance plans. To receive guaranteed1 returns, select from a lump amount payment, monthly income, or full life benefit. Your spouse is eligible to make use of the life insurance policy coverage under the terms of the full life benefit plan.
