When a person decide to buy a term insurance for himself he takes two points in consideration firstly from which company he can get a cheapest plan and secondly credibility of the company or how much he can trust the company that it will not reject its claim and claim settlement is smooth and fast.
Many people has this perception that insurance companies rejects the claim on very frivolous grounds; in support of their view they give the reference of few newer companies take for instance Aegon Religare rejected 45% of its claims whereas IDBI Federal, Future Generali and DLF Pramarica has rejected one out of every five claims whereas LIC has rejected only 1.09% claims in FY’11.
These figures does not present the real picture; take for instance that IndiaFirst Life Insurance was established in 2009 its all the claims fall in the early death claim category; when a policy holder dies within the two years of policy it is considered as a early death claim; the early death claim comes into the close scrutiny of the insurance companies; as they needed to be investigated as there is a suspicion that it may be the deliberate attempt to fraud therefore companies investigate the case in detail; whereas non-early claims does not require all these investigation and therefore they are settled smoothly. Early death claims may be subject to delay in settlement but they are not subject to rejection of the claim.
According to the insurers the main reason of claims being rejected is that policy holders do not provide authentic information about themselves they tend to suppress important facts that are needed to be disclosed at the time of buying of policy.
There are certain things that need to keep in mind while buying a term policy; a customer should avoid making certain mistake on his end.
The premium is subject to many facts such as the age of the policy holder, his health condition, his occupation, his current insurance cover, his income, his family back ground all these factors constitute in deciding the risk cover for the person.
This is your responsibility that your correct facts should reach the insurance company; if they find any surprise later it may become the cause of rejection of claim.
Basic mistake we often make is that we trust our agent blindly; this is absolutely wrong you must read the proposal form thoroughly whether your agent has filled all the information correctly or not, then only sign the form; never sign a blank proposal form and leave it to the agent to fill; in such condition it may happen that your incomplete or incorrect facts will reach the insurance company.
Don’t think that the agent is doing you a favour by over looking your health problem he is only selling a policy and he will not be there if your claim is rejected because of pre-existing ailment.
Insurance companies arrange a medical test if your cover is of larger amount. Cover is more, the medical test will be more rigorous take for instance that if a person is going for the cover of Rs. 15 – 20 lakh the company will not mind to spend Rs. 1,000 or 1,500 on the medical test to know about your health.
If the cover is not large as it is less than Rs. 1,00,000 and the person is young say less than 35 years; the company would not like to spend on your medical test; it will rely your disclosures.
Try to fill in your form yourself take the agent’s help only if needed; don’t hide your medical facts to pay less premium; make it clear whether you consume alcohol or tobacco or not. Don’t hide your family’s medical history because if in later stage company will come to know about any hereditary disease they can reject your claim on this ground.
As for common perception don’t avoid the medical test if you go through rigorous medical test it will rule out the rejection of claim on the ground of pre-existing disease.
You must be completely honest about your age as well; as age is also a deciding factor in your premium.
At the time of buying of policy company will require your documents such as Pan Card, ID proof and birth certificate; so provide only genuine documents; your submitted documents must not have differently spelled name, they must not have different address or birth dates.
Pay the premium timely to avoid the lapse of the policy; there is a grace period of 15- 30 days to pay the premium.
Some grounds on which the claims get rejected
- Hazards occupation – some occupations are considered more risky such as motor racing, Armed forces, construction, mining etc so clearly define your occupation and whether your occupation involves any risk, if you hide your correct occupation it may lead to the rejection of your claim
- Early death – early death is that if a policy holder dies within the two years of the policy; the company will suspect it whether it is deliberate attempt to do fraud; so insurer will do close scrutiny of the case and it may take up to 6 months.
- Non disclosure of the disease – If a person dies with a disease the company will think that he might have concealed his disease.
- Hereditary disease – If there is any history of disease in your family please discloses it because insurers may reject your claim on this ground whether insured person may have developed the disease later.
- Over insurance – Disclose your other insurance as well because the company would like to know; does a person’s life is worth the cover he wants. Over insurance may subject to suspicion.
