5 Key Reasons Your Term Insurance Claim May Get Rejected

Term insurance is one of the key ways one can ensure the financial security of their loved ones in their absence. In case of the policyholder’s demise, the nominee or the beneficiary of the term insurance can file a claim to avail of the death benefit. The term insurance claim process is quite smooth, however, a claim may end up being rejected due to certain reasons. 

Top 5 Reasons Why Insurance Companies Reject Term Insurance Claims

The term insurance claims rejection reasons are:

• Policy Lapse

  If premiums due on term policy are not paid on time, most insurance companies offer a grace period for paying the missed payments. However, if the missed premiums are not paid even during the grace period, it results in a policy lapse or policy being inactive. If a claim is raised on a lapsed policy, the insurance company rejects it right away.

• Hiding Information

  Honest declaration of all the desired information during the term insurance plan purchase is a must. A policy buyer must be honest about their medical history and lifestyle habits. If, while evaluating a term claim, the insurance company finds any undisclosed information, then the claim might be rejected due to non-disclosure of significant information. 

• Incorrect or Incomplete Information

  Incomplete details in the proposal form can result in term insurance claim rejection. Therefore, it is advisable to provide correct and complete information regarding age, qualification, income, occupation, and more while filling out the form.

Must read: Difference Between Term Insurance And Money Back Plan    

• Non-disclosure of Previous Insurance Policies

  Your term insurance claim can also get rejected if you have not disclosed any previous insurance policy to the current insurance company.

• Absence of Updated Nominee Details

  Not updating the nominee's details can also cause an obstruction in an insurance claim. It is because if the insurance company is not able to verify the nominee’s/legal heir’s eligibility for the term insurance benefits (with the help of succession certificates or legal heir certificates), it may lead to claim rejection.

Note that it is important to declare the nature of the policyholder’s death because if the nature of the policyholder’s demise is not included in the death types covered under the plan, the claim may be rejected.     

Tips to Avoid Term Insurance Claim Rejection

Major tips to take care of Term Insurance Rejection Reasons:

• Pay premiums on time.
• Disclose all the required information honestly and completely.
• Ensure correct updating of nominee details.
• Inform your insurance company about other insurance policies.

Conclusion 

You do not have to do much to prevent term insurance claim rejection. Being honest in your approach will definitely keep you away from the inconvenience. So, make sure that you always practice honesty while buying your policies and avoid financial inconveniences at times when you cannot afford more stress. 

Read along: Benefits of Buying Rs. 1 Crore Term Insurance

Disclaimer: This article is issued in the general public interest and is meant for general information purposes only. Readers are advised not to rely on the contents of the article as conclusive in nature and should research further or consult an expert in this regard.