Life is uncertain and one way to secure your financial future is through insurance. Traditional plans like endowment and money-back policies are expensive if you want to avail of a higher coverage.
A more affordable way to procure a higher sum assured is term insurance. It is a pure life cover and pays the policy benefits to your beneficiaries in case of an untoward incident during its term. Most term plans have no maturity benefits; however, some insurance companies offer the return of premium if you survive the policy term.
In the unfortunate event where your beneficiaries need to file a claim under your term plan, they need to ensure everything is in order. Here are four common reasons why a term insurance claim may be rejected:
Not providing important information
When you purchase a term plan, it is necessary to provide all relevant and important information to the insurance company. In case you deliberately withhold such information or make an error at the time of purchasing the policy, it may become a term insurance claim rejection reason.
Failure to disclose details of previous policies
According to the Insurance Regulatory and Development Authority (IRDA), it is mandatory to provide details of all previously held policies. If you fail to disclose details of existing or past policies held by you, the insurance company may reject the term insurance claim filed by your beneficiaries. Such disclosure is not dependent on the sum assured and the information must be provided to the company at the time of purchasing a new policy.
Inaccurate employment information
Certain types of employment are considered as high-risk by the insurance companies and have specific terms and conditions guiding coverage in such instances. Often, these types of employment include hazardous jobs. If you fail to provide details about such high-risk jobs or disclose inaccurate information, it may be a valid term insurance claim rejection reason.
Incorrect medical history
Another reason why the claim may be rejected is in case you default on the medical tests or provides incorrect test results at the time of purchasing the policy. Insurance companies may require you to undergo medical tests and it is your responsibility to undergo these when you are buying life insurance online or offline. Moreover, the correct results must be provided to the insurer. It is also mandatory to provide accurate details on any pre-existing medical conditions and health history to ensure the claim is not rejected in the future.
Various insurers offer different types of term life insurance plans. It is recommended you compare the various policies and understand the terms and conditions and inclusions and exclusions to make an informed decision.
Do not forget to provide all relevant information at the time of purchase to avoid rejection in the future.