Reasons Which Can Lead To The Failure Of Your Life Insurance Policy?

A life insurance policy aims to provide financial security to the family if the life assured dies in an unfortunate event. However, the situation becomes troublesome when the insurance providing company rejects your insurance claim. Moreover, the financial burden becomes more strained if the life assured is the family's sole breadwinner. Therefore, it is advisable to carefully read all terms and conditions of the policy and regular payment of the premium amount. 

Read on to find out more factors that can lead to claim rejection by the insurer, and make sure you don't commit these mistakes while choosing a plan for yourself.

Reasons Which Can Lead To The Failure Of Your Life Insurance Policy?

Here are some situations which can lead to the failure of your life insurance policy.

1. Poor Knowledge About Your Policy

It is essential to thoroughly understand the terms and conditions of a life insurance policy and how it will help meet your requirements. Moreover, the policy exclusion consists of death-related situations like death due to war, terrorist attack, suicide or childbirth etc., which are often overlooked by people while purchasing a policy. This neglect consequently leads to claim rejection, leaving the mourning family stranded. 

2. Filing False Details

Another reason for claim rejection is disclosing false information and personal details by the life assured during the policy inception. A life insurance policy is a contract based on trust between the policyholder and the insurance provider. Hence, it is crucial to preserve the sanctity of the deal by not making any false claim about your age, income or health status or family history of diseases in your policy application.

3. Avoiding Medical Examination

A medical examination of the life assured is done before the issuance of the life insurance policy. This is done to help the underwriter in risk evaluation and decide if the application should be approved or not. Hence, it is advisable to undergo the test to improve your chances of getting the policy. 

4. Non-Payment of Premium Instalments

The regular premium payment ensures the validity of the life insurance policy. Hence it is advisable to pay premiums on time. Many insurers offer extra 15-30 days according to the policy as a grace period to help the policyholder in paying the pending premium amount. Even then, if the policyholder cannot pay the premium instalments, the policy gets terminated, and all the benefits are discontinued. 

5. No Proper Beneficiary

The beneficiary or the nominee gets the death benefits after the death of the life assured. Thus, it is vital to appoint your dependents like your spouse, children or old parents as the nominee so that they get the direct benefits of the policy after your demise. 

6. Delayed Claim Request

The claim request should be made within the specific duration of the life assured’s death. Moreover, the nominee must be familiar with all the terms and conditions to make an accurate claim request. Hence, it is advisable to keep the nominee in the loop while purchasing the life insurance policy for yourself. 

Takeaway

Filing the application form of a life insurance policy should not be taken lightly. You should carefully compare different policies before narrowing them down to the most suitable one. Further, you should be well informed about the terms and conditions of the policy. You can even consult an entrusted insurance agent or a credible financial advisor to help choose the right life insurance policy at affordable prices. 

You may also like to read -

• How Can Life Insurance Be an Effective Investment Tool?
• Why Should You Buy Life Insurance After Marriage?

Disclaimer: This article is issued in the general public interest and 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.