Term insurance is designed to provide a family with financial support if the policyholder dies during the policy period. The insurer pays the agreed death benefit to the nominee, which can help cover outstanding loans, household expenses and other financial commitments.
Most term plans offer coverage for a fixed period, typically ranging from 10 to 40 years. However, a nominee may not always receive the payout. Insurers can reject claims for reasons such as incorrect nominee details, missed premium payments or discrepancies in the information provided when the policy was purchased. Understanding why a claim may be rejected and what nominees can do next is important when dealing with such a situation.
Also Read: Health Insurance Covers Hospitalisation. But Who Pays for Tests, Medicines, and Follow-up Visits?
What Can Nominees Do?
The reason for the rejection of the claim is usually listed on the rejection letter. Nominees can file a step-by-step process to file an appeal.
Understand the claim: Read the letter carefully to understand why the insurance claim has been rejected.
Gather supporting documentation: Collect all supporting documentation, such as the original death certificate, claim form, policy papers, and more to support the claim. Ensure that the documents are aligned with the information originally given in the claim.
Internal grievance redressal: Use the documentation to file a complaint with the insurer's Grievance Redressal Officer. Follow the process they advise. Nominees can also get advice from a lawyer.
If the mechanism does not work, they can use the Bhim Bharosa portal by the Insurance Regulatory and Development Authority of India (IRDAI) to file a complaint.
They can also approach the Insurance Ombudsman for claims of up to Rs 50 lakh.
For higher claim amounts, the consumer or civil courts are an option.
Common Reasons For Claim Rejection
Common reasons for claim rejection include failure to disclose pre-existing conditions such as diabetes, failure to pay premiums on time, incomplete nominee information, and death due to excessive drug or alcohol consumption or activities like paragliding, depending on the policy terms and circumstances.
Also Read: Buying Health Insurance After 60: Five Policy Conditions To Compare Beyond Premium
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