There are reasons why life insurance claims may be denied

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Although death is inevitable, it can be avoided with proper planning and awareness. Many people are the sole breadwinner in their families. People dependent on them suffer from their untimely or unforeseen death. A good life insurance policy is a wise decision. They can live a happy life and be sure that their family will have financial support in the event of an emergency. Sometimes, even the best efforts can come to nothing. False life insurance claims are not uncommon to be rejected by insurance companies. Insurance companies may reject a claim for many reasons. Knowing these factors could help you avoid common mistakes.

False Information

Trust and correct disclosures are key to the success of the insurance industry. Rejecting a claim can be as simple as hiding information, even if it seems trivial. For example, people often conceal their smoking or drinking habits when filling out an application for a job. Term insurance plan,  although it may lower your insurance premium, you should not claim if your family is most in need of the insurance. It is possible to have problems later on by leaving out information such as age, height, and weight. Insurance is purchased through agents and bank executives. They may accidentally enter incorrect information without checking. In order to receive higher assured benefits, some people may even give a false income. To save your family from any unnecessary hardships, it is important to be truthful and alert when filling out the application form.

Payment for Premiums

The purchase of a life insurance policy is only the beginning. Regular payments of the premium should be made. Only if the premiums are paid on-time, a life insurance policy will be active. Insurers can deny claims for a policy that has lapsed if you fail to pay a premium. Insurers usually notify customers via email or messages if they forget to pay their premium. In addition, insurance companies offer a Grace period, in most cases, it is 30 days. All premiums paid will be lost if a policy is cancelled. There is no way to get it back.

Nominee Information

All benefits of insurance coverage are available to the nominee named by the policyholder. If the nominee information has not been completed or updated, an insurance company may reject a claim. People usually buy insurance. Life insurance when they are young, they name their parents as the nominees. They forget to update their nominee details as they age. If parents are not there when the claim is filed, it will be rejected. Keep your nominee information current and monitor correspondence from the insurance company to avoid rejection.

Contestability Period

Companies insert a contestability clause into life insurance policies when they sell it. This clause allows for rejection of claims if the death occurs within a short time after purchasing a policy. The contestability period begins as soon as the policy is purchased. The contestability period for insurance companies can be anywhere from one to two year. Insurance companies can become suspicious if death occurs within this time frame and open an investigation. Suicides are a common cause of death, but claims can be rejected even if they happen quickly.

Types of Death

Insurance companies also have a standard exclusions list for deaths, just like the contestability clause. This helps to minimize losses. There are many types of deaths. Life insurance covers you. If the policyholder has been involved in hazardous activities or dies from a pre-existing condition, life insurance claims are rejected. The cause of death is carefully checked by insurance companies. Insurance policies generally do not cover deaths due to terrorist attacks, natural calamities or homicides.

Delay

Insurance companies allow you ample time to file your claim. Although it is rare for claims to be rejected because of delayed filing, it does happen occasionally. Insurance companies are not allowed to refuse claims due to delays, according the Insurance Regulatory and Development Authority of India. The policyholder's family members should file the claim as soon as possible. While insurers may not reject a delayed claim, they might delay paying.

Avoiding medical tests

Insurance is a risky business. In order to lower the risk, insurers must perform a thorough assessment. To get an accurate idea of risk, insurers verify all medical information provided by applicants. Many companies conduct Medical testsThis is especially true if you are high-risk or older. The chances of your claim being rejected by the insurance company due to pre-existing diseases are very high if you refuse to undergo the tests. As all pre-existing conditions are covered by the coverage, it is prudent to take medical tests.

Previous insurance policies not disclosed

Many people don't realize how important it is for them to inform their current insurer about any previous insurance policies. Even if the policy is small with a Rs. 1 lakh sum assured, it should be disclosed to your current insurer. You should not take this lightly. You must disclose this information before you buy term insurance, Failure to do so could result in claim rejection depending on the case.

 

Exclusions - Deaths not covered by term insurance

1. Pre-existing medical conditions: The insurance company will not pay the death claim if the policyholder fails to disclose any pre-existing medical conditions, injuries, or ailment.
2. The nominee commits murder of the insured: The insurance company may withhold the death benefit payable to the nominee if it is proven by a court that the nominee was directly or indirectly involved. The claim will be paid to the legal heirs if the nominee is found guilty of murdering the life assured.
3. Alcohol or drug-induced death: Most insurance companies won't provide term insurance coverage to drug addicts and habitual drinkers. The insurance company may reject their insurance claims, even if they conceal their drug addiction or drinking problem from them and purchase term insurance.
4. Death due to hazardous activity: Term insurance may not cover death caused by participation in extreme sports like paragliding or skydiving, bungee jumping and water rafting.
5. Death in childbirth: The term insurance company can refuse to honor a death claim if a female insured fails to disclose her pregnancy or dies in childbirth because of complications.
6. Suicides: If the insured dies within 12 months of policy renewal or commencement, the beneficiary or nominee will be paid 80% of the premium (not the sum assured in a non-linked insurance policy). The beneficiary will receive 100% of all premiums paid if the insured is a member of a linked plan. It is important to read the policy carefully before you buy. Some insurers offer coverage for suicide deaths, while others don't.

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