5 reasons why your insurance claim can be rejected

And here's how to avoid rejection of your claim

Many lives were claimed during the recent incident where the Germanwings flight crashed into the French Alps. Many more were lost in Nepal and India in the recent earthquake. Disasters like these remind us of the importance of insuring our life and assets. A life insurance policy offers financial security for a family when the breadwinner passes away, especially when the death is untimely. But when the life insurance claim gets rejected it defeats the whole purpose of buying the life insurance in first place. Most of these claims are rejected on legitimate grounds, understanding them would help to ensure that if your loved one have to ever file a claim, it does not get rejected.

Here are some of common reasons why the claims generally get rejected.

1. Proposal forms lack information

Most common mistake which life insurance consumers make is to allow their insurance agents to fill the form on their behalf. You should stop viewing the process of filling the form as a time consuming and cumbersome process. Instead you should diligently fill the form yourself. Life insurance policies get issued on the basis of details you provide while filling the proposal form.

If the life insurance firm finds that you have not provided complete information or withheld any information, it may reject your claim on the ground of non-disclosure of material facts. There are high chances that these agents may sometimes fill incorrect information and submit the form to meet their sales target. Moreover these agents may not be aware of all the details regarding your medical history. Hence you should avoid relying on your agent for filling up your proposal form.

2. Concealment of information

Information which you provide while you fill the form is critical and is used by the insurers to fix the premium. This information includes your age, occupation, smoking habits, alcohol consumption, pre-existing diseases, family history, details of other policies you hold etc. You should make sure that you do not conceal any of this information as it might give reasons for life insurers to reject your claims.

3. Pre-existing ailments

Claims which are made on account of pre-existing ailments usually get rejected by the life insurers in case they are not revealed in the proposal form. Pre-existing ailments are defined by the insurance regulator as any ailments for which the policyholder had either symptoms or was diagnosed and received medical treatment for same during the 48 months prior to the first policy issued by the insurer.

Such pre-existing diseases, if any, should be declared and not withheld. Failing which, your life insurer may reject your claim on that ground. It is also necessary to diligently read the 'Terms and Conditions' to understand the disease coverage of the given policy or rider.

4. Don't let the policy lapse

Insurers only settle those claims that are active. So it is necessary that you pay the premium on time. Insurer will not settle claims when your policy has lapsed due to non payment of premiums. Should you miss paying the premium on time, you should ensure that the same is paid within grace period to avoid policy lapse as claims made even a day after such a lapse will get rejected by the life insurer.

5. Keep nomination updated

It is necessary to update the information regarding the nominee. It is natural to name your parents as nominees if you had bought the policy while still being single. But it would be a good practice to nominate your wife after marriage as there are chances that she is the one who is in need of the money to support your children's future and maintain the lifestyle of your family.

In addition, it is important to keep in mind that any delay in filing the claim may raise suspicion and delay the whole process of claims payment. To ensure a smooth claims process, most companies provide the help of claims officer. Hence, inform your loved ones about the life insurance policies you have bought, contact number of the agent advisor and the life insurance company and the documents that will be required to file the claim. While it is difficult to discuss own death with your loved ones, it is for their happiness you must do it, at the earliest.

Illustration: Uttam Ghosh/Rediff.com

V Viswanand is Sr. Director & COO, Max Life Insurance