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Have you ever considered what will happen if your term insurance claim gets rejected? Well, that would defeat the sole purpose of buying the policy. The main objective to buy a term insurance plan is to secure the family in case of an unfortunate event. However, if the claim gets rejected, the family could be left to deal with the financial burden while nursing the loss of a loved one. Such a situation would be too difficult for the family to deal with in your absence. Hence, it is critical to understand the possible reason for your life insurer to reject the claim and ensure you secure a dependable and reliable policy.
Let’s find out some situations that could lead to a claim rejection and how you can avoid them to safeguard your family:
- Concealing or providing incorrect information while filling the application form
The most common cause of rejection is false or incomplete information in the application. You must disclose all the correct facts. This includes name, age, address, height, weight, occupation, lifestyle (smoking, drinking, etc.), income, previous policies, and more. Any misrepresentation of data can create doubt and be treated as fraud. This could lead the insurance company to discard the claim. - Not disclosing the complete medical history while applying for the plan
At the time of applying for a term insurance plan, you are obligated to disclose previous and existing medical conditions, including past surgeries, medical procedures, illness, critical illness, cardiovascular issues, etc. The insurer will also administer a medical checkup. But it is your responsibility to disclose all details truthfully to avoid claim rejections in the future. In many term insurance calculators, the companies also ask for lifestyle choices at the time of estimating premiums.
- Providing incomplete or wrong information about employment
All information about your occupation and nature of the job must be disclosed. Most insurance companies classify certain types of jobs as high-risk. Most of these are linked to a hazardous environment. These include mining workers, firefighters, etc. Thus, you must not hide any details related to the nature of the job to avoid claim refusal later. - Hiding old and/or existing insurance policies in the application form
At the time of filling the application, you must reveal all information about the previous and existing insurance policies. Details such as the name of the insurer, the sum assured, policy number, etc. must be correctly stated. Insurance companies take this disclosure very seriously. Hence, you must not withhold any important information since that could lead to a claim dismissal. - Lapse of the policy due to non-payment of premiums
Any default of payment of premium can cause the policy to lapse. But most companies offer a grace period, post which the non-payment leads to the deactivation of the term insurance plan. Any claim filed for an inactive policy is rejected. The best way out is to set up an automatic debit facility. But in case the default has led to lapse of the plan, you should immediately pay the penalty and reactivate the policy. - Not listing or updating the nominee for the term plan
A term insurance plan offers a death benefit to the nominee or the beneficiary. In case the policy does not mention correct facts about the receiving party, the claim settlement process can become extremely complicated. Hence, you must update all nominee details such as name, address, age, contact information, etc. This will help to ensure that the due benefit is received without any hassle.
It is important to understand that insurers do not aim to reject your claim. All genuine claims are settled by the insurer. However, specific rules must be obliged to ensure there is a minimum hassle in the claim settlement process. You should read all policy documents thoroughly and follow these simple guidelines to be sure that your family is financially supported in those critical hours of need. For more info you can check out our page.
