Picture this: As a breadwinner of the family, you buy term insurance for your family members to secure their financial needs in your absence. But what would happen if your term insurance claims get rejected during contingencies? Your family would go through financial turmoil due to inadequate funds to maintain their standard of living without your support.
According to the Insurance Research and Development Authority of India (IRDA), many insurers have rejected approximately 12, 769 claims in 2016-17. Since the coverage of term insurance is usually high, many people are unsure about the approval of their claims. Insurance companies might either approve or reject your claims based on various reasons. As a policyholder, you should hold the responsibility to understand the prime reason behind the rejection of your term insurance claims.
Given below are the top seven reasons that highlight why your term insurance claim might get rejected:
- When you provide inaccurate information
While applying for your claim, you should submit the accurate information to your insurance company. Do not hide any personal details like your age, income, habits, and so on to ensure maximum transparency between you and your insurer. In addition to this, fill the correct policy details for the faster approval of your claims.
- When you don’t read the policy document
There is no denying that you might be in the habit of glancing through any essential paperwork. When it comes to a policy document, take your time out and carefully read the terms and conditions of your insurance companies. A policy document includes all the medical conditions covered by your insurer. If you make a claim for uncovered diseases without reading the document, your claim is bound to be rejected.
- When you don’t reveal the nature of your job
You might have heard an old adage, ‘no job is too big or too small.’ As an independent individual, you can choose to either work in construction or an organization. However, working in construction, factories, mines, and so on is life-threatening since it involves high-risk. In such a scenario, you should reveal the nature of your job to your insurance company before buying a term policy.
- When you don’t make your medical condition clear
Your health condition is of utmost importance to your insurance providers. Therefore, while filing for a claim, you should specify your and your family’s medical history clearly. In addition to this, you should also mention if you have any unhealthy habits like smoking, consumption of alcohol or other harmful drugs.
- When you don’t renew your term plan
When you purchase a term policy, you should pay premiums regularly to continue the policy in the long run. In case you fail to make the premium payment due to a financial crunch, your insurer will provide a grace period (30 days) within which you should compulsorily pay the premium. If you fail to pay the premium within those 30 days, your term policy lapses and you will no longer be eligible to file for claims.
- When you don’t undertake medical tests
Under a term policy, you might receive a high coverage based on your health risks. Therefore, your insurance company might ask you to undergo medical tests before sanctioning your desired sum assured value. Failure to undergo medical tests can increase the chances of claim rejection.
- When you don’t disclose the number of policy holding
As a policyholder, you might own multiple life insurance policies. While it’s understandable to have several policies in your name, see to it that you disclose the number of your policy holdings. It is compulsory to declare the number of policies you own since many insurance companies have stringent rules and regulations.
In a nutshell, term insurance acts as a financial cushion to support your family in your absence. Therefore, you should carefully select a plan with maximum term insurance benefits for your family’s safety. An online term plan is convenient, time-saving, and hassle-free. In addition to this, you should keep these points mentioned above in mind to ensure your claim is approved without creating a mess in times of need.