Types of Term Insurance Claims You Must Know About

Types of Term Insurance Claims You Must Know About
Documents Required for Claim Settlement
Endnotes

A term insurance plan is a type of life insurance that provides a guaranteed amount to the nominee in the event of an emergency. Term plans are cost-effective because they provide comprehensive life coverage for a cheaper monthly fee. With such plans, the policyholder can build a financial cushion to cover the expenditures of further education for his or her children, marriage, and maintenance for his or her spouse in the life assured's absence. The money can also be used to pay off huge debts that would otherwise be a burden to the beneficiaries. Policyholders are covered by insurance in the case of both natural and unnatural death. The following article mentions the examples of term insurance claims.

Types of Term Insurance Claims You Must Know About

Here are the types of term insurance claims everyone should know about while purchasing a plan.

Death Claims

A death claim is an official request made by the life insurance policy's nominees if the life insured dies within the policy term. The death benefit is used to help the recipients with their financial obligations. The money can even be utilised to pay for your children's education or cover your dependent parents' expenditures.

Rider Claims

Term Insurance Riders are additional benefits that policyholders can choose for an extra premium cost when purchasing a term insurance policy. Policyholders who opt for the rider claim will be able to receive compensation for events other than maturity or death. Critical Illness Rider, Accidental Total or Permanent Disability Rider, and Waiver of Premium Rider are all common term insurance riders. Any of these riders purchased on the policyholder's behalf by the nominee can be claimed by the nominee.

Maturity Claims

When a policy's term expires, a sum of money known as the Maturity Claim amount is paid out to the life assured. It is only paid if the policy has been properly continued, i.e. all required premiums have been paid on time, and the policy has run its course.

Unlike most term insurance policies that pay out to the nominee if the policyholder dies unexpectedly during the policy's term, some term life plans, known as TROP (Term Return of Premium) plans, include a "return of premium" feature in which all premiums paid during the policy's term are returned to the policyholder at the policy's maturity. Therefore, these plans give both returns and complete coverage. Purchasing a TROP plan is suitable for those searching for a savings-cum-protection tool, as the lump sum amount can be used to help accomplish important financial goals.

Documents Required for Claim Settlement

Here is some of the most basic documentation needed to submit a death claim.

Death certificate
Claim Intimation Form
Proof of the Policyholder’s age
Original Term Insurance Plan Documents
Proof of the beneficiary’s identity
Medical certificate as proof of the cause of death

Insurance firms divide the death of the life assured into two categories: early death and non-early death. If the policyholder dies within three years of purchasing the policy, it is considered an early death. In this case, the insurance company may take the following steps.

Check with the hospital to see if the Policyholder was admitted there at the time of death.
If an aviation crash caused the death, they could contact the airline to see if the covered person was a passenger.
If medical or unnatural reasons caused the death, obtain a medical certificate.
If the death was caused by suicide, accident, or murder, obtain a police FIR and the post-mortem report.

Endnotes

Term insurance is typically purchased as a safety net to help your family navigate any situation in your absence without worrying about money. The Policyholder's family can cope financially thanks to the death claim settlement. Thus, the advantages of term insurance can only be realised during a financial crisis or when faced with a significant financial burden.