5 Term Insurance Claim Rejection Reasons

Term insurance is known to offer financial security to your family, especially in your absence. But what if the claims made on the policy for the compensation are rejected? It is quite scary to think that you have done everything right to protect your loved ones financially after your death, and they end up losing the benefits due to claim rejection.

So, what do you think might go wrong? In this section, we will be discussing the reasons for term insurance claim rejection in detail, along with the ways to avoid it. Let us begin.

Term Insurance Exclusions

Claiming for things that your policy does not cover is one of the most common reasons for claim rejection. Hence, it is essential to be well versed with the term insurance exclusions before buying the policy and when making a claim on it.

Some of the most common term insurance exclusions are as follows –

  • If you (the policyholder) die due to any pre-existing health condition or injury that was discovered before buying the policy, the insurer will not pay the death benefit to the beneficiaries.
  • In homicidal cases, if the listed beneficiary is found guilty by the court to be directly/indirectly involved in your death, the insurer can withhold the death benefits. 
  • If the cause of death is due to the influence of alcohol or drugs, the insurer will reject the claims made by the beneficiaries.
  • If you die in any adventurous sports-related activity that includes racing, paragliding, skydiving, bungee jumping, water rafting, etc. it is not covered.
  • For female policyholders, if you are unable to disclose your pregnancy and die during the childbirth due to complications, the insurer might not honour the death claims made.
  • laims made for death by suicide are not covered under term insurance plans in India.

5 Common Reasons for Term Insurance Claim Rejection

Apart from claiming for things not covered under your term insurance plans, there are a few other reasons for claim rejection as well. Here, take a look –

1. Inaccurate details when buying term insurance

At times, people forget or provide inaccurate information when buying term insurance plans in India. This practice has proven to be detrimental to claims made on the policy in the near future. Details such as age, income, professional details, qualifications, lifestyle habits, etc. need to be mentioned correctly.

These factors help the insurer determine your policy premiums. Any inaccuracy in the information provided can constitute fraud and lead to losing the policy benefits in times of need.

2. Non-disclosure of existing health conditions

It is mandatory to undergo a medical examination when applying for term insurance in India. Failing to disclose any previous/existing health conditions can cause issues in the future. Here, it is also mandatory to mention lifestyle habits such as smoking and drinking. Having these details mentioned in the policy application will help make the claim process easier in the end.

3. Not mentioning/updating the beneficiary list

In term insurance, the death benefits are paid to the beneficiaries of the policy. Hence, it is necessary to enlist nominee details such as their name, address, contact information, etc. when buying the policy. Having no beneficiaries mentioned in the policy can cause trouble during the payout and can lead to claim rejections as well.

4. Policy Lapse due to non-payment of premiums

Note that term insurance claims are settled for active policies only. No benefits are received in case the policy matures. Similarly, if you skipped paying the premiums (even after the grace period), the policy lapses. In such a situation, the previously paid premiums go to waste, and no benefits are received. Hence, it is wise to pay premiums on time so that the policy does not lapse. However, to understand the process of reviving the lapsed term policy, get in touch with your insurer.

5. Non-disclosure of existing insurance policies

When buying any life insurance product, it is best to reveal all the existing insurance policy details. At times, people forget to mention these details or conceal facts only to realise that it can result in claim rejection in the future.

Tips to Avoid Term Insurance Claim Rejection

The following are the list of things you can do to avoid getting your claims rejected-

  • Make sure that the beneficiaries of the policy are well versed with the claim process. This is because you will not be around to help them through it when the time comes.
  • Ensure that you are providing all the needed information to the insurer at the time of buying term insurance. It includes everything from your existing medical condition, income, age, previous/existing policy details, etc.
  • Pay the policy premiums on time to avoid a policy lapse.
  • If the insurer is asking you to undergo a medical examination, you should.
  • Know the coverage of your term plan and its exclusions.
  • Mention the beneficiaries if you haven’t done that already.

To Wrap It Up!

You should not be afraid of claim rejections in term insurance, especially if you have provided accurate information to the insurer. Also, know that term insurance offers more than just financial security to your loved ones upon your death. You can enhance the scope of the policy with rider benefits such as critical illness cover, return of premium cover, accidental death cover, and more.

Are you looking for a term insurance plan in India?

Consider buying Term Insurance at Finserv MARKETS online. You can benefit from features such as affordable premiums, bespoke plans to suit your needs, extensive coverage, hassle-free claim settlements, rider benefits, and so much more.

So, secure the financial future of your loved ones with term plans at Finserv MARKETS, right away!

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