If there is one thing that all individuals desire, it is to guarantee that their bereaved loved ones experience no financial hardship in their absence. If you are the primary provider for your family, you will undoubtedly acknowledge that if presented with the opportunity to safeguard your family from the financial strain of your debts or liabilities so that they may continue to pursue their life objectives following the arrangement even during your absence, you would seize the chance.
Have you ever contemplated what course of action you would take if, during a difficult time in your life, your term insurance claims were denied while you were in mourning for the loss of a family member? You will experience the dual anguish of bereavement for a cherished family member and challenging financial circumstances. Life can become extremely difficult and challenging for you and your family during such times. However, to avoid being in such a situation, you should educate yourself on the common reasons why term insurance claims are denied.
The insurance company may reject a claim for a variety of reasons.
- Your callousness towards your insurance
The prevailing and primary factor contributing to the denial of the majority of term insurance claims is individuals’ indifference towards their insurance. It is common knowledge that obtaining term insurance is a time-consuming endeavour due to the extensive reading and information completion that must be completed on the policy. Typically, individuals are in such a hurry to purchase the policy that they frequently erroneously entrust their insurance agent with completing the application.
The individual need only sign the term insurance form in the designated locations; the agent is then provided with the complete, unfilled form. What many individuals fail to recognise is that the individual purchasing term insurance must peruse the entire form of information. We strongly advise against having the agent fill out your term insurance because he or she is unlikely to be well-informed about the minor and major details of your family. Additionally, there may be instances when the agent is in a rush to make more sales and will leave crucial columns blank, which could cause complications during your claims process.
To prevent the denial of your term insurance claim, you should begin perusing and completing the form yourself.
- Inputting inaccurate data on the term insurance application
Another prevalent cause for the rejection of term insurance claims is that policyholders frequently provide inaccurate or entirely erroneous information on the policy form. To maximise the advantages of your term insurance, it is critical and obligatory that you maintain complete and honest transparency with the insurance provider regarding everything.
- Withholding medical history information from the company
Upon deciding to purchase term insurance, you must ensure that you are not concealing any information regarding your medical history. If you conceal any details about your medical history, there is a significant likelihood that the company will deny your claims in the future.
For this reason, ensure that you are always disclosing all pertinent details regarding your medical history. Informing your term insurance company of any injuries or illnesses you have experienced or are currently experiencing will ensure that you do not encounter any obstacles when filing claims.
- Refraining from all medical examinations
When an individual decides to purchase a term insurance plan, they are required to undergo a series of medical examinations that provide the insurance company with information regarding their general health and well-being. Neglecting to undergo such medical examinations or providing inaccurate information regarding them will inevitably result in the denial of your insurance claims by the insurance provider.
- Hiding your previous or alternative policies
According to experts employed in the claim sections of the term insurance company, a significant factor contributing to the rejection of the majority of claims is that policyholders fail to provide complete disclosure regarding their current and previous policies. They claimed that if individuals provide the requested information in complete candour, they will encounter no obstacles when submitting claims and receiving payment for the same.
- Policy lapse represents a significant obstacle to long-term insurance claims
Policy lapse constitutes an additional factor contributing to the denial of term insurance claims. A policy lapse occurs when the policy’s critical documents are misplaced or lost. Under such circumstances, the company would not acknowledge any claims. People must therefore securely maintain their term insurance documents.
- Delay in Filing Claim
A claim request should not be subject to any time restriction from a technical standpoint. However, insurance companies typically impose a time limit of 30 days from the date of death, subject to variation among insurers, to determine the cause of death through the collection of circumstantial evidence. This is particularly true for early death claims filed within three years of policy initiation and for accidental/unnatural deaths. Refusal of a claim may ensue if the deadline is exceeded without justification.
- Exclusions from the Policy
Life insurance policies contain certain exclusions, which may differ among insurers. Claims are not eligible for compensation in the event of a death due to one of the listed causes or circumstances.
Such exclusions may include chronic conditions, diabetes, or congenital or pre-existing conditions such as mental illness, cancer, or. Even maladies acquired subsequently, such as HIV/AIDS, can result in the denial of claims. Exclusionary criteria may also encompass lifestyle-related factors such as substance abuse, intoxication, or smoking.
Exclusions may result from self-inflicted factors such as travelling under the influence of alcohol, committing suicide, and so forth. Exclusions may also result from participation in high-risk activities, such as military service or adventure sports. Situational exclusions include war, nuclear attack, and even extensive natural disasters such as tsunamis, earthquakes, and so forth.
- No Update Regarding Nominee Particulars
Obtaining the insurance claim amount becomes challenging for a financially dependent individual unless their name is designated as the nominee in the insurance policy. A financial dependent must endure a cumbersome procedure to claim the insurance money in the absence of a nominee and may encounter opposition from other relatives when attempting to obtain a succession certificate.
The nominee’s name is terminated automatically if an insurance policy is pledged in exchange for a loan or for any other objective. Therefore, the policyholder must remember to resubmit the nomination once the loan has been repaid. Should this not occur, the nominee’s mortality claim could be denied.
Obtaining claim honorability from life insurance companies is frequently a challenging endeavour. Present-day insurance policies contain an excessive number of clauses, conditions, and exceptions that indicate that individuals are expected to become ill by contracting a particular disease under particular circumstances at a particular time of day and notify the insurer via a particular channel at a particular time, but only if they are covered by a particular insurance plan. Noncompliance with any of these stipulations would lead to the withholding of insurance benefits and grant the employer the lawful authority to request a reduction in support for your dependents.
You as a customer can take the following steps to guarantee that your life insurance provider always pays you the amount due.
- Avoid hiding information:
“Concealment of information” refers to any factual detail that an individual with life insurance fails to disclose, or neglects to disclose, that may potentially affect their health, lead to a medical condition necessitating hospitalisation, or affect the payment of death benefit. Any illness or disease that necessitates the submission of a life insurance claim will be traced back to any information provided in your application form that suggests the possibility of this illness or disease. An investigation will be conducted into any pre-existing conditions, illnesses, smoking, or drinking patterns that may be associated with your hospitalisation or death. Failure to disclose such information to the company will result in the denial of the sum assured and other benefits for you and your dependents. Be forthright and truthful when providing this information because it will determine your premiums. In the absence of any concealed information, you are exempt from any liability, and the insurer is obligated to reimburse the sum assured.
- Make on-time premium payments.
Only insurers for policies that are currently in effect will settle claims. An extraordinary number of individuals are unaware that policies lapse when premium payments are delayed. Upon the lapse of your policy, you will no longer be covered, and any premiums that have been paid up to that point will be rendered futile. You or your dependents won’t receive a full refund of the premiums, and they won’t have any legal standing to ensure that you’ll get the sum assured or death benefit from the company. There are certain circumstances in which postponing payments may result in penalty fees and reinstatement fees as well. Furthermore, if you maintain a spotless record of premium payments, the insurer will have an additional advantage when attempting to settle.
- Modify the nominee’s details.
The individual designated as your nominee shall be entitled to all benefits derived from your insurance policy at the appropriate time. It would be prudent to designate your parents as nominees if you are unmarried. Bestow names on your spouse and offspring after your wedding. Regardless of your current relationship status, you should always designate a nominee so that a benefit can be distributed to a dependent. Nominees are typically individuals whose continued existence and prosperity are critical to their livelihoods.
- Don’t delay in filing insurance claims.
While a phone call to your insurance company might be the last thing on your mind during a medical emergency, it could mean the difference between maintaining or losing coverage. It is advisable to provide your emergency insurance information to a trusted acquaintance, colleague, or family member who can notify the insurance company in your absence. In essence, the life insurance provider must be informed of occurrences that may subject them to financial liability in the future. Notifying the company as soon as possible of any incident that necessitates medical attention will facilitate the processing of your claim. Additionally, insurers regard delays in hospitalisation notification as possible indicators of fraudulent activity. Additionally, prompt notification can shield you from this allegation.
- Complete the application for insurance by yourself.
Avoid entrusting the completion of your forms to an insurance agent who is impeccably attired, perpetually grinning, and evasive of questions. Your insurers use the information you provide on your forms to determine your premium payment amount, overall coverage, and even some exclusions. Merely disclosing all pertinent details of your medical history to the insurance agent will not equip him with the necessary expertise to comprehend and elucidate the more complex aspects of your medical history on the form. You will be required to set aside a portion of your day to organise your records and independently complete the forms with accurate information. Your knowledge is unparalleled, and it is your responsibility to ensure that your insurance provider is well-informed. If your hospitalisation can be attributed to alcohol or tobacco use, abstaining from these substances could pose a significant challenge. To meet sales quotas, agents complete forms quickly and care less about your future. Do you wish to entrust that individual with potentially enormous sums of money that may become the responsibility of your dependents during their most critical moments?
- Accept medical examinations.
Insurance companies pay for your medical tests and examinations to have a more complete understanding of your health. The greater their knowledge, the less they can assert was withheld to evade paying you the sum assured that is owed. Additionally, these exams may aid in the early detection of maladies, allowing for better treatment. This is frequently observed in health insurance policies, but it can also be significant in life insurance policies, as it provides life insurance companies and institutions with a comprehensive understanding of your current health condition, enabling them to anticipate potential developments.
- Carefully examine the policy document.
A fundamental purpose of the policy document is to emancipate the organisation from any potential legal and financial obligations that may result from entering into a contractual agreement with you. Neglecting to pursue any insurance benefits from the insurance company is equivalent to incurring an insurance claim, contracting a disease, demise, or any of the circumstances enumerated in the “exceptions” section. The policy document is replete with clauses such as the exceptions list, which releases the insurer from any liability it may have had towards you. It is critical to meticulously and comprehensively analyse your policy document to ascertain that none of the clauses it contains are plausible. Additionally, you may be able to renegotiate your policy document with your insurer if they are. If your insurer refuses to negotiate certain clauses and conditions, there are numerous insurance providers eager to acquire you as a client. It is crucial to mention that while the majority of insurers may not negotiate exceptions, they might grant some flexibility under specific conditions.
A final remark
The aforementioned factors were among the most frequent causes for term insurance companies to deny claims from policyholders. You have thoroughly reviewed the material. If you desire a financially stable future for your family and yourself, we strongly advise you to avoid repeating such errors.
It is imperative to bear in mind that life is inherently capricious, and one never knows what the future may hold. Therefore, it is always preferable to approach each task with extreme attention. If you are an individual who has yet to acquire term insurance, you should contact a reputable insurance agency or company about doing so to purchase such coverage. Such coverage will safeguard your family’s future.
Maintain awareness and knowledge of all developments about your insurer. Remain informed regarding the specifics outlined in your policy document. Maintain vigilance and knowledge regarding the prerequisites that establish your eligibility to file a claim. Life insurance is a serious financial product that, when utilised appropriately, can be a lifesaver for one’s family and dependents, in addition to being a tax-saving instrument.