"I applied for a claim six months ago and the insurance company has asked me to submit multiple documents. Why does it take so long to settle a claim?"
Sounds like a familiar refrain? Any person who invests in a life insurance policy expects not only the tangible financial security for their loved ones, but also a very critical and intangible advantage of peace of mind, knowing that they have provided for their loved ones in their absence. They hope their family will not have to go through any financial trauma and that the insurance investments reap returns when the family needs them the most. Hence, it can be agonising if the insurance claim, filed by the nominee, is rejected by the insurer, leaving the bereaved unequipped to deal with the loss.
Unfortunately a large number of rejected claims are often a result of the insured not understanding the policy details or due to carelessness while purchasing the policy or filling up the nomination form.
A few simple precautions and a proper knowledge of what to keep in mind when filling out the policy and claim forms can help avoid this additional trauma of a rejected claim. It will also make the claim-settlement process easier for both the nominee and the insurer. The following six steps can help any customer understand a policy better and avoid the needless worry of whether the claim will be cleared when it is needed the most.
One of the most common reasons for claim rejection is incorrect information provided in the proposal form. It is very important to be honest while filling up the forms and disclose all facts, including age, income proof, health condition like blood pressure, diabetes, etc, and lifestyle habits such as smoking/drinking, truthfully.
Most claims are disputed or rejected simply because the claimant, at the time of applying for the policy, did not truthfully and completely disclose information regarding his/her medical condition, pre-existing diseases, etc, leaving the nominee in a predicament. An insurance contract is entered into on the basis of "utmost good faith", and it is incumbent upon the policyholder to be aware of this. Though such disclosures may result in a slight increase in the premium of the policy, they make the process of claim settlement very smooth and provide peace of mind in the long run.
To ensure that your loved ones can genuinely avail of the benefit of the insurance policy you have purchased for their financial security, you need to be regular with premium payments. Once the policy is purchased, one must not default on any of the premium payments. For example, if the customer feels that he/she will be more comfortable paying premium every month rather than a lump sum annually, he/she should opt for monthly premium payment.
Also, if continuing premium payments is not possible due to any reason, the insured should inform the insurance company before the policy lapses. Most insurance companies take into account genuine circumstances and make necessary provisions like making the policy a paid-up policy to help the customer.
REGISTER CLAIM AT THE EARLIEST
It is advisable that the claimant register a claim with insurer as early possible as some companies specify the time (60-90 days) allowed for intimation. The claimant can visit the nearest office of the insurer and give a written intimation of the death. One can also call up the toll-free numbers or refer to the insurer's website for further guidance. The claimant should provide the contact details and current mailing address to the insurer to facilitate speedy communication.
It is also advisable that the claim be submitted along with original/attested death certificate as this is the most critical document for claim processing. The documentation list required for claim processing is available on the website of all companies. Hence, it is advised that a claim be registered with all the required documentation in one go. This would facilitate speedier processing of claim.
And, most importantly, all claim documentation needs to be completed by the nominee. In case of death due to illness/in hospital, the claimant should submit the available medical documents. This will save the time lag involved in the procurement of documentation by the insurer. Besides the documents mentioned above, one is typically required to submit the original policy document, completed claims form, ID proof of the nominee establishing the relationship with the policyholder, post-mortem report, savings bank account details and FIR copy, if required.
READ THE FINE PRINT
Rejection of claims can be avoided if the customer has proper knowledge of the policy and is vigilant while going through its terms and condition. It is imperative that the insured knows and understands each and every clause of the policy and clarifies any confusion he/she might have with the insurer. One should also be very careful while opting for additional riders and should make it a point to go through every clause pertaining to each of the opted rider to understand what additional benefits are included in the policy or excluded from it.
INFORMING THE NOMINEE
Lastly, it is your responsibility to keep your nominee informed about the policy and its benefits and clauses. All the documents pertaining to the insurance policy must also be kept carefully and within the full knowledge of the nominee, so that while making the claim he/she can provide the insurer with all the relevant details immediately and accelerate the claims process.
These simple steps and precautions on your part can ensure a smooth and hassle-free claim settlement and, thus, provide all the intended financial support to the family at the time when it is needed the most.
The author TR Ramachandran is CEO & MD, Aviva India