How Can You Avoid Term Life Insurance Claim Rejection?

How Can You Avoid Term Life Insurance Claim Rejection?
Take Away

Getting life insurance companies to fulfil claims is an arduous process most of the time. A slight blunder on your part could result in the denial of claim payment by the insurance provider. Today's insurance policies contain so many clauses, conditions, and exceptions that the claim will only be paid if the life assured fell ill due to the specific illness mentioned in the policy and after informing the insurer at a particular time. Although there have been instances when the insurer employed legal loopholes and terms in their policy contracts to avoid paying sum assured, on a surprising number of occasions, the mistake was made on the policyholder's end. So, let's learn about some guidelines that must be followed to avoid any term life insurance claim rejection.

How Can You Avoid Term Life Insurance Claim Rejection?

Here is the list of certain factors which help in avoiding term life insurance claim rejection.

Fill Your Proposal Form Yourself

Based on the information you provide on your forms, insurers determine the amount of your premium payment, total coverage, and even some exclusions. Thus, you should fill the form yourself as simply telling the insurance agent your entire medical history will not enable him to grasp and explain the more complicated aspects of your medical history on the form. Whether the error is deliberate or unintended, it can result in claim denial or even fraud. Hence, it would be best not to lie about your age, education, income or occupation, as this can lead to your claim being denied. You can take some time to organise your records and accurately fill out all of the information on the forms on your own. Moreover, you don't have to worry about filling out extensive documents that take hours now that online term insurance is available. The proposal form can be filled within a few minutes.

Disclose Necessary Information

You may be tempted to conceal vital medical and lifestyle details when purchasing a term insurance policy to lower the premium or obtain a more significant sum assured. However, you must remember that your family can end up paying the price of this massive blunder, as nondisclosure could result in a death claim being denied. Based on your age, occupation, income, medical history, lifestyle habits like drinking or smoking, etc., the insurance company calculates the premium amount. It determines whether or not you should be given term insurance coverage. So, if you die without providing accurate medical and health reports to your insurer during policy inception, your term insurance policy may be denied due to nondisclosure. Thus, to avoid future claims being denied, you should always disclose details about your lifestyle habits, such as smoking and drinking.

Pay Regular Premiums

A surprising amount of people are unaware that insurers settle only claims on active insurance plans. Moreover, failing to pay premiums on time causes policies to lapse, and you will no longer be insured, and whatever premiums you have paid up to that point will become useless. The premiums will not be refunded to you, nor will they have any legal standing to ensure that you or your dependents get the policy's sum assured or death benefits. Furthermore, delaying your payments may result in penalty and reinstatement costs in some situations. In conclusion, it must be noted that when it comes time to settle, the insurer will have one less thing to negotiate about if you have a clean track record of paying premiums.

Update Beneficiary Details

After the life assured's death, a nominee receives the proceeds of the death benefit if the claim is approved. Some policyholders overlook the need of updating nominee information in the event of the nominee's death. In that instance, the insurance company will need documentation such as a succession certificate to identify the policyholder's legal heir(s) and pay the policy benefits when the time comes. If you are not married, naming your parents as nominees is a good idea. You can name your spouse and children as a nominee once you have married.

Take Away

Maintain contact with your insurance and keep yourself up to date on all developments and specifics of your coverage. Moreover, maintain vigilance and knowledge of the conditions that will allow you to file a claim. Life insurance is more than simply a tax-saving strategy; it's a serious financial decision that, when made properly, can save your family and dependents from financial ruin.