Life Insurance Policy Claim Settlement Process  – Details and Pointers You Should Note

Our lives are uncertain, so having a comprehensive life insurance policy may act as a financial safety net to safeguard the financial future of one’s dependents. Then again, having a policy is not enough. Individuals should also note the claim process and the requisites of filing a life insurance claim. The task of filing a cover could be daunting, especially amid the loss of a loved one, however, insurance beneficiaries should be thorough with the process to ensure smooth streamlining of the claim process. That said, let’s explore the steps of the life insurance policy claim process and requirements.

Types of life insurance policy claims

Policy settlement is among the most crucial processes that insurers follow to help their customers. Typically, insurance companies are obligated to settle their customers’ insurance claims. Individuals need to submit their claim form and contact the policy agent to inform the process. However, the claim process may vary based on the type of policy claim.

These are the broader types of life insurance policy claims –

• Maturity claim

This claim is raised when the insured survives the policy term. On the maturity date, the insured is required to submit a maturity claim and original policy bond to ensure prompt settlement. Typically, insurers issue post-dated cheques or disburse payments through ECS credit on maturity if the required documents are submitted before the due date, or soon after they are furnished following the maturity date. However, if they are faced with any delay in settlement they may seek out the help of the insurer’s grievance redressal channel for better insight.

• Death claim & rider benefit 

To raise a death claim or a rider claim, individuals need to follow four distinct steps. To begin with, the claimant needs to submit a written claim intimation at the earliest to inform the insurer and ask them to initiate the process. The intimation must be supported by key information such as policy number, insured’s name, date and cause of date, place of death, and the name of the policy claimant. Individuals may avail of a claim form from their nearest branch of insurance provider or download the same from their website, if available.

Document required to raise a life insurance policy claims 

Documents serve as proof and support insurance claims raised by a claimant. Failure to provide essential documents or incorrect documents can delay the claim settlement process, or lead to a short settlement. To initiate the process individuals should provide documents such as –

• Claim form
• Original policy document 
• Death certificate 
• Police FIR and post mortem in case of death due to accident 
• Health certificates or medical records attested by the treating doctor or hospital in case of death due to an illness 
• Advance discharge form

However, insurers may ask to submit additional documents to support the claim. Individuals must promptly provide the required documentation to streamline the process and expedite the steps. After all required documents are submitted the verification process begins.

Timeline to settle a claim

According to regulation 14 (2)(i) of the IRDAI’s Policyholder’s Interest Regulations, 2017, insurance companies are required to settle a claim within 30 days after they receive the required list of documents and clarifications if any sought by them. 

Notably, insurance companies are mandated to complete their additional investigation and claim settlement no later than 90 days from the date of claim receipt and would be settled within 30 days from there on.

Ideally, most claims are settled by the insurer by issuing a cheque within 7 days of receiving the documents. However, if the insurer is unable to settle a part or the entire claim, they will notify the claimant in writing disclosing the reasons behind the same.

Reasons why a life insurance claim can get rejected 

Life insurance claims go through a lot of scrutiny to get settled. The same can get rejected under different circumstances. However, some common reasons can lead to the rejection of claims, leaving policy nominees without any support.

Some of the common causes behind rejection include –

1. Submitting false information

During the claim verification, if the insurer finds that the claimant has filed a fake claim or provided false information to raise claims, they will reject the plea outrightly. Additionally, they may take legal action and levy a high cost for the fraud investigation.

2. Delay in filing

The claimant must notify the insurance company immediately in case of an accident. Delaying the same could lead to rejection of the claim. Additionally, if they fail to provide the required documents on time the life cover plea will meet the same feet.

3. Incomplete claim form

Information like age, income, lifestyle habits, occupation, and details of previous policies are deemed crucial for claim verification. This is why claim forms should be filled out carefully and supported by accurate details. However, if the claimant fails to provide the crucial details or offers inaccurate details the insured may cancel the claim.

4. Medical records confidentiality

Past and present medical conditions, history of treatments, and operations tend to impact policy premiums. This is why many insurance calculators seek personal and financial details when estimating policy costs. Similarly, individuals must disclose their pre-existing health conditions when purchasing a policy. In case insurers find discrepancies in details during the claim process, they will dismiss the claim and reject it.

5. Keeping coverage a secret

Individuals are required to disclose all their existing insurance policies when applying for a new plan. Some individuals may omit the information to avoid digging through old records to find policy details. However, such an attitude could lead to claim rejection, especially in situations where insurers demand complete disclosure of previous policies.

6. Not having a nominee

Policies that do not have a nominee attached to them or the details are not up to date, could be a cause of concern in the event of untimely death of the insurer. In addition, Insurers tend to not entertain claims if a nominee is not mentioned in a policy.

7. Claims against policy exclusions

Every insurance policy has a list of circumstances that are not covered by the plan. If individuals raise a claim against one of those exclusions their claim will be rejected immediately.

Keeping these things in mind can help individuals plan their life insurance claim policy. Additionally, the details will help streamline the process more actively.