Types Of Claims Under A Term Insurance That You Must Know About

Maturity Claims In Term Insurance
Death Claims In Term Insurance
Non Early Death Claims in Term insurance
Early Death Claims in Term insurance
Conclusion

The main purpose of a Term insurance policy is to ensure financial protection to the family of the policyholder in case of his early death. We hear a lot about the rejection of claims in Term insurance. As a policyholder, it is better to have an understanding on claims in Term insurance, to ensure a smooth claim.

Claims in Term insurance are of 2 types:

Maturity Claim
Death Claim

Maturity Claims In Term Insurance

This is the claim payable, when the policyholder is alive at the end of the policy term. This payment is made to the policyholder and normally will not create any complication. Insurance companies will inform the policyholders well in advance about the payment.

Policyholder has to return the discharge form duly signed along with the original policy bond to get the maturity claim of the policy.

Death Claims In Term Insurance

In case of death of the policyholder during the term of the policy, the nominee or a nearest relative has to inform the insurance company about the death. This is called death intimation. The intimation should contain the policy number, date of death, cause of death and the place of death.

On receipt of the death intimation, the Term insurance company will issue a set of claim forms to the nominee. The requirements for death claim in Term insurance depends on the duration of the policy.

In case of death, within 2 years from the start of the policy (date of acceptance of risk by the insurance company), then such claims are treated as early claims.
In case of death after 2 years, it will be treated as a non early claim.

Non Early Death Claims in Term insurance

In case of non early death claim, (death claims after 2 years from the start of the policy) the requirements are simple. The nominee has to submit the original policy bond and proof of death. Proof of death is the death certificate issued by the local bodies like municipality. Nominee also has to submit a claim form which contains the details of death, his relationship to the policyholder. In case of death due to unnatural causes, police inquest report, post mortem report etc. is also called for.

If all documents are in order, the Term insurance company will decide on the claim very fast and settle the amount in favour of the nominee.

But if there is an ambiguity regarding death or if there is a reason to believe that the death is due to some illness which existed before taking the policy, then the Term insurance company will go for a detailed investigation and the payment can be delayed.

Early Death Claims in Term insurance

In the case of death claims reported within 2 years from the start of the policy or after revival, the insurance company will go for a detailed investigation to find out whether the claim is genuine.

Insurance companies will call for the treatment particulars, last medical attendant’s certificate, hospital report, burial certificate, employee’s leave record etc. to eliminate any fraudulent intention. The company will ensure that the cause of death does not go back to a date prior to the issue of the policy. A responsible officer of the insurance company or an external agency will be deputed for the claim investigation.

On investigation, if it is proved that there was a suppression of material facts at the time of taking the policy, the insurance company will reject the claim. Term insurance is a contract of utmost good faith. The policyholder and his agent are expected to disclose all material information pertaining to the health conditions at the time of buying the insurance.

Conclusion

If a claim is rejected, the nominee can first approach the insurance company for a review with all the documents supporting his claim. All insurance companies are having their claim review committee which will look into it. You can also approach the Insurance Regulator with an appeal.