Overview
Getting life insurance for you and your loved ones is the best decision one can ever make. Life insurance offers multiple benefits, i.e., long-term future protection and securing finances for the future. When a family member passes away, the individual suffers not only emotionally but also financially. And that’s when life insurance claims come into play. But sometimes, individuals have to face claim rejections and live in a state of confusion. But no worries. Today, we will understand these common reasons that lead to claim denial or delay.
Five common mistakes to avoid while filing a claim
1. Non-Disclosure of Medical History or Lifestyle
One of the leading reasons for claim denial is the non-disclosure of medical history or lifestyle-related information. It is essential to be honest and give full details when applying for a life insurance policy claim regarding your medical history and lifestyle, such as smoking or doing some dangerous activities. And if such information is declared later, the chances of claim rejection increases. Hence, one should always disclose the information, whether it’s your smoking, drinking habits, or any illness running in the family.
2. Lapse Due to Non-Payment of Premiums
Lapse means discontinuing a life insurance policy due to non-payment of the required periodic premium. After the policyholder fails to pay premiums even after the provided grace period, the policy stands cancelled/lapsed. Once your policy lapses, the insurance company is not obligated to make death claim payments. Therefore, ensure that you pay your premiums on time or find a way with your insurer to prevent your policy from lapsing in case of missed premiums.
3. Exclusions Specified in the Policy
Every policy comes with a set of guidelines stating all the pros and cons. The policy also covers the situations and conditions where they cannot pay for the claims made. Such conditions can include suicide within the first few years of the policy, death due to a pre-existing condition, or death resulting from engaging in criminal activities. To know what is not covered, reading and understanding the exclusions listed in your policy document is essential.
4. Death Occurring During the Contestability Period
The contestability period is typically the first two years after discontinuing a life insurance policy. If the policyholder dies within this period, the insurance company has the right to investigate the claim and the information provided at the time of application. If differences or misrepresentations are found, the claim can be denied. However, investigations in death claims In Life Insurance may vary from case to case.
5 . Incorrect or Incomplete Information on the Application
The most common mistake is carelessness. This is one fact that is known by everyone but cared by none. While filing a claim form or submitting relevant proofs and documents, always check twice before the final submission. Look for minute details like missing information, incorrect spelling, etc. Provide all information to avoid delay in claim processing. All information provided should be accurate and complete to avoid unnecessary hang-ups during the application process. Also, try to present your case with true information.
Bottom Line
Life insurance claims serve as a critical safety net for many families, so it becomes necessary to understand the cause of claim denial. Knowing the cause will help you to avoid future claim rejections. Make sure to file your claim with genuine and authentic information, pay premiums on time, and avoid minor mistakes while filling out the form. It is essential to learn what the policy does not cover and what implications the contract has for the contestability period. You should regularly review and update your life insurance to reflect significant life changes that are taking place and, for that matter, to stand well to serve its purpose. Also, if you ever get stuck at any stage of claim processing or encounter claim-related issues, seek professional help from Insurance Samadhan. We are a team of experts with years of experience in claim resolutions.
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