Tips to ensure a smooth Term Insurance claim process

While Indian insurance companies have a high successful claim ratio of 98.45%, claim rejections are not uncommon. Some common issues include information mismatches and clerical errors. Though they are mostly resolvable, they significantly extend the period for claim clearance.

For a person already dealing with the loss of a loved one, handling extensive paperwork can be a tedious task. The best way to avoid such stress is by following a few tips that will ensure you experience a smooth term insurance claim process.

This guide will provide tips to ensure a smooth term insurance claim process and explain why doing things a certain way matters.

Do not leave room for ambiguity

The first step is to ensure that your policy does not contain misinformation. There is room for ambiguity when some information is incorrect or a crucial fact is not communicated. This information generally includes health conditions, serious illnesses, lifestyle choices, and anything that impacts your expected life span. Clerical mistakes while filling out the form can also cause ambiguity.

For instance, if a policyholder inaccurately states smoking habits, the insurer might consider it misrepresentation. Later, if the cause of death is linked to smoking, the claim could be denied, leaving the beneficiary without financial support. Clear, accurate information ensures seamless claim processing and prevents disputes.

Understand your policy

To be able to process the policy benefits in future, it is crucial to understand the policy inside out when you purchase it. In a legal sense, a term insurance policy is an agreement with several terms and conditions. Many policyholders make the mistake of skimping through a major portion of these terms and conditions, labelling them as generic laws.

They also make the mistake of letting the agent fill out the form instead of doing it themselves. While the insurer and its agent might work with a good conscience, this does not change the fact that the policyholders remain unaware of several crucial clauses that could alter their claiming process.

For example, Ravi purchases a term insurance policy but skips reading the terms and conditions. He lets the agent fill out the form and remains unaware of a clause excluding coverage for death during adventure sports. Years later, when Ravi tragically passes away during a trekking accident, his family's claim is denied due to this exclusion.

Keep the insurer posted

Whether a nominee experiences a smooth claim process depends greatly on the policyholder's actions. These include filling out the policy form correctly, understanding its various terms and conditions, and keeping the insurer posted about any major policy changes.

These generally include minor changes like a changed contact number, address, name, nominee, etc. However, they can also include major changes like illness, sudden lifestyle changes, or increased risk at work.

For example, if Anjali, a policyholder, develops a critical illness but does not inform her insurer, it could create issues during the claim process. When Anjali dies, the insurer may investigate the undisclosed illness and delay or deny the claim. Keeping the insurer updated about significant changes ensures the nominee, like her son Aryan, experiences a smooth and hassle-free claim process.

Let the nominee be informed

One recurring issue with the term policy claim process is an uninformed nominee. This issue is prevalent even among the most meticulous policyholders, who have all their ducks in a row. The usual reason for this is an oversight on the policyholder's side. Policyholders are not mandated to inform the nominee about the nomination or even get their consent.

This liberty usually results in an oversight of informing and educating the nominee about the policy and their rights to claim the policy benefits in the event of the policyholder's death. Such lack of information can lead to delays in filing the claim or even result in the benefits going unclaimed.

Understand the process and make timely intimation

Some onus of ensuring a smooth claim also falls on the nominee. The nominee should understand the complete claim procedure, including the documentation required. The nominee should also inform the insurer promptly of the policyholder's demise. Depending on the company policy, you can make the intimation online and/or offline.

So, suppose the nominee delays informing the insurer after a policyholder's demise, assuming ample time is there to initiate the process. In this case, the delay may cause complications, as some insurers have specific timelines for intimation. Additionally, the nominee struggles with gathering the required documents, further prolonging the claim process.

Understanding the claim procedure and promptly notifying the insurer can help avoid unnecessary delays and ensure timely access to the policy benefits.

And if nothing helps, seek professional help

The chances of claim rejection drop significantly if you follow the instructions carefully. However, there is always a probability of facing an unfathomable challenge. The best thing to do in such a situation is to seek professional help. These professionals include insurance agents, financial advisors, or legal professionals specializing in term insurance.

They have extensive experience in dealing with various issues related to term insurance policies and will give you sound advice on how to manage your situation efficiently. Getting professional help will also ensure that the problem does not worsen.

FAQs

How can I avoid ambiguities in my term insurance policy?

Ensure all personal information, especially related to health and lifestyle, is accurately documented in the policy to prevent misunderstandings and claim denials.

What should I know about my term insurance policy?

Understand all terms and conditions of your policy, including exclusions and clauses, to ensure you're aware of what's covered and what isn't, reducing surprises during the claim process.

Why is it important to keep the insurer updated with changes?

Regular updates about changes in your health, lifestyle, or personal information help avoid claim disputes and ensure the policy remains up-to-date and effective.

What should a nominee do to ensure a smooth claim process?

Nominees should be well-informed about the policy details and claim procedures, and they should notify the insurer promptly after the policyholder's demise to avoid delays in claim processing.