Insurance claims do get rejected. What if it’s unjustified ?

11 reasons Term-life insurance claim can be rejected

What to do if the claim rejection appears unreasonable

Buying a term-insurance doesn’t ensure the it will cover death of policy holder under any or all circumstances. There are death claims which gets rejected because of  exclusions in term-life insurance plans and also non-disclosure. Insurance is contract between two parties, the policy holder and the insurer, when you buy a policy online or through agent, you must read the form carefully, do not hide any fact about yourself what you ought to tell the insurance company, i.e. the questions mentioned in the insurance application. Also, keep a copy of of your filled up form, take a print out and keep it in a folder/ safe ocker for future reference.

Initially it me seem tempting to avoid habits like smoking/ drinking, hobbies like bungee jumping, horse riding etc, but you should know in advance for such activities Life Insurer may add extra premium. The focus here should be to ensure to respond to each query truthfully. Following are the nine common reasons why claims get rejected. But everything cannot be decided in black and white, and there are times when conflict may arise between the nominee and insurance company and nominee may feel the insurance is rejected on false grounds, will cover that too in the post. 

life insurance claim can be rejected

Also Read – Term Life MUST to secure future of loved ones

11 reasons Term-life insurance claim can be rejected –

Suicide or death due to self-inflicted injury – If the policy holder commits within one year of purchaisng the policy, nominee won’t get death benefit. However, the nominee will get the benefit second year onwards.

Death involving homicide: If death of the policy holder is suspected to be murder and the nominee(s) are suspect of the crime, the claim-compensation to that nominee(s) will stand rejected, until her/his innocence is established in a court of law

Death due to sexually transmitted diseases like HIV or AIDS – Death claim arising out of STDs will be rejected as per common exclusions, no insurance company will honour such claims

Death due to the pre-existing health conditions (condition present prior buying the insurance) – If policy holder happens to have pre-existing health condition such as diabetes, hypertension or any disease, such claims which may arise from death due to complication on such condition will be declined. As, many health condition appears little later part of our life, it is prudent to apply for term-life insurance policy as soon as getting a job, atleast by 30 years of age. 

Death caused due to the involvement in illegal or criminal activities – If a policy holder dies while engaging in any illegal or unlawful activities such as drug peddling, smuggling, unauthorised arm dealing any activity which is considered illegal as per Indian Law, the insurance will be rejected

Accidental death due to driving under the influence of alcohol or drugs – If the policyholder dies due to accident caused by driving under the influence of Alcohol

Death due to the participation in racing activities – Death caused by sports or adventorous activities like bike racing, car racing, traking, bunjee jumping, horse racing, any adventorus activities which has inherent life risk, claim arising from such activities are out of the scope of policy claim. Claim arising from fatal accident such as these will be outright rejected. 

Death due to pregnancy and childbirth – If the death of the policyholder takes place due to pregnancy complications or childbirth, the insurer would not pay the sum assured to the nominee.

Pre-existing disease / Condition – Death due to any condition that existed while availing the term insurance policy will not be settled by the insurer

Death due to natural disaster/ war/ nuclear calamity – It is a common exclsion in life insurance, in situations like war and nuclear calamity, insurance company protects itself from mass claim which may arise in such situations. 

Non-disclosure – Non-disclosure such as smoking habits, recent surgery, any medical procedure, family history or any point in the query list of the policy application form  will be counted as breach of the insurance contract conditions, and on discovery of such facts, Insurance companies will reject the claim

What to do if you feel the claim rejection was unjustified?

The above are the direct rejection reasons, but if nominee is not satisfied with the reason of rejection, delay in claim settlement the nominee can escalate the matter. Ideally, insurance claims needs to be settled within 30 days of claim application. If the claims are not settled on time and the nominee is not satisfied with the response from the insurance company, nominee can take following action. The nominee needs to file a complaint first with the insurance company through the consumer grievances section online or reach out grievances cell officer with written complaint and required supporting documents at the earliest, they should respond to your complaint within 15 days of complaint submission.

If Insurance company fails to resolve your query or sort the claim settlement issue, you can complaint to IRDAI (Insurance Regulator and Development Authority of India)approved Insurance Omudsman in a written format. Insurance Ombudsman scheme was created by government of India for individual policyholders to have their complaints settled out of the courts system in a cost-effective, efficient and impartial way.

IRDAI Website details out here when and how you can approach the ombudsman- https://www.policyholder.gov.in/ombudsman.aspx  

There are at present 17 Insurance Ombudsman in different locations in India. Ombudsman has authority to intervene in the claims below Rs. 30 lakhs. Incase of claims above 30 lakhs, one needs to approach the consumer court for sorting the matter with legal help. In consumer court, Court’s directive will be final for the insurance company. Insurance company cannot escalate the matter to any other court. If the nominee wins the case, the court can direct the insurance company to pay penalty and interest charges on the claim amount in favour of the complaint.

So, Read the policy application carefully, make comparison with few products, also check claim settlement ratio before making a decision. Even after buying a insurance policy, Policy holder gets a free-look period of 15 days, within which policyholder should go through the policy document, incase of dissatisfaction, policy holder can cancel the polcy and get back the premium paid (company may deduct medical expenses – if incurred).  

Check my blog for informative posts on financial products, second income options and financial education.

Must read for Financial Education – 
Let’s Talk Money – Monika Halan
I will teach you to be rich – Ramit Sethi
Rich Dad Poor Dad – Robert Kiyosaki
Easy Money Triology – Vivek Kaul 
Aapka Paisa Aap Samhalein (आपका पैसा, आप संभालें)- Rajnish Kant 

POSTED ON AUGUST 21, 2020 ”DID YOU KNOW PERSONAL ACCIDENT INSURANCE COSTS RS. 12?”

Youtube Link

error

Found the information useful? Please spread the word :)

Latest post alert
Pinterest
fb-share-icon
LinkedIn
Share