Reason behind Life Insurance claim rejection

Claim rejection is the worst thing that could happen to a person after his death. the situation gets terrible when he is the only earner in the family. Family gets drained both financially as well as emotionally. the primary reason to buy life insurance is to protect your family financially and they can continue to maintain same standard of living in case of your absence. unfortunately, if your death claim gets rejected, it would cause your family a lot of trouble for handling expenses and maintaining standards. so,you have to be cautious to work well on certain things that could avoid getting your claim rejected. Below are the top reason for rejection of life insurance death claim.

  1. Contract status : Insured must pay his premium regularly to keep his policy in inforce status. Once he misses to pay premium on due date, insurer provide him a grace period of 30 days. Post extension of grace period, policy turns to lapse. Insurance claim gets rejected in case of lapse policy status. So, it is advisable to pay premium on time to avoid any conflicts.
  2. Wrong information : Life insurance is an agreement between a person and insurance company in which a person has to pay premium for getting coverage. Premium is calculated on basis of information provided by life insured. There are various factors like age, height, smoking and drinking habits which life insured has to provide when he takes policy. He has to be cautious while filling details. There are chances of getting claim rejected if he has filled any false information. Sometimes to pay less premium, life insured hides various information. For ex. A life insurance premium gets increases in case if he is a smoker, to pay less premium he might provided details to insurance company as Non smoker. So, it is advisable to provide correct information to respective life insurance company to avoid any conflicts in claim settlement.
  3. Not disclosing information on existing illness : Premium is calculated on the basis of existing details. If life assured is suffering from existing illness such as asthma. diabetes or any, it should be disclosed to respective life insurance company. Loading(increase in premium) is applied on basis of existing illness. Along with existing illness, previous surgery, operations, health condition of family members or any hereditary disease should be disclosed too.
  4. Nominee may not have updated : Life insurance companies gives death benefit to nominee or beneficiary of the policy. There are cases where nominee is not alive. In such conditions, life insurance claim gets rejected. For ex, Ajay started his first job at age of 25 where he declared his Father or mother as beneficiary. Unfortunately they are not alive due to some circumstances. Post death of his parents, he failed to update nominee. Now in case of life assured death, life insurance company is unclear about fund disbursement. So,there are chances of claim rejection. So, it is advisable to update nominee whenever required. In above case, ajay could have updated nominee to avoid claim rejection. He could have made beneficiary either to his spouse or children . In case of minor nominee, appointee is required.
  5. Contestability period : A contest-ability period is between 1 to 2 years post issuance of policy. It differs from one insurance company to another. When death occurs in contestability period, insurance company investigates whether details provided by life assured was accurate or not. In case of suicide in contestability period i.e within 1 year from issuance of policy, life insurance company only provide benefit as some percentage of premium paid rather than sum assured. There are chances of claim getting rejected when it arises in contestability period.
  6. Inclusion and exclusion in policy : The cause of death is minutely examined by life insurance company. There are various causes of death which are not covered in life insurance company such as accidental death where life assured was driving post taking alcohol or drugs i.e in an intoxicated state. Inclusion and exclusion differs from one insurance company to another. It is advisable to read policy document carefully.

Disclaimer :

This article is not sponsored and not meant for endorsing any particular insurance company. Please Check Terms and Condition of respective organization along with inclusion and exclusion before buying insurance policy

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