Term life insurance is a mutual contract of trust between you and your insurance provider. The insurance company promises to pay your family a specified sum in case of your unfortunate demise during the policy tenure. However, for your claim to be processed smoothly, you should be truthful and disclose all relevant information to your insurer. The main objective to buy a term plan is to secure the financial future of your loved ones in your absence. But if you hide or give false information to the insurer, your claim might be rejected, eventually defeating the sole purpose of buying a term insurance. Hence, you need to understand the possible term insurance claim rejection reasons.
Here are some term insurance claim rejection reasons and how you can avoid them to create a foolproof insurance policy:
- Hiding facts or giving incorrect information: At the time of buying a term plan, term insurance companies require you to fill an application form. The form typically asks for basic details such as your name, age, gender, weight, occupation, income, health condition, lifestyle (smoking, alcohol, etc.), previous policies, and others. It is your foremost responsibility to reveal all this information truthfully and not hide any important information.
If you do not maintain this transparency or hide facts from your term insurance company, there are high chances your claim might be rejected in the future. This because any misrepresentation in the policy form is termed fraud. Hence, if you wish to avoid this, ensure that you declare all details honestly.
- Providing incomplete or untruthful information about your job: Insurance companies charge you a premium as per the mortality risk associated with you. For this purpose, the insurer would ask you to give details regarding your occupation. Some jobs, such as mining, firefighting, etc., are considered high-risk jobs in terms of the insurance. Hence, it is of utmost vital to disclose the nature of your occupation to the insurer before buying the term life insurance.
If the insurer finds out that you intentionally hid information regarding your job, the company might reject your claim in the future. Some people tend to not understand the terms and conditions of a term plan and hence, do not disclose the required information.
However, policies like Saral Jeevan Bima Yojana (SJBY) are available for all individuals irrespective of gender, domicile, occupation or educational qualification. Saral Jeevan Bima Term Insurance is an affordable term plan that comes with simple features and similar terms and conditions across different insurance companies. This makes it easier for you to know the terms and rightly disclose all the needed information.
- Disclosing incomplete medical history: Among all other term insurance claim rejection reasons, wrong medical details top the list. When you apply for term life insurance, the insurer asks you to mention details about your medical history and health condition. Your family history, family diseases, past illnesses, critical diagnosis, present health conditions, etc., are all factors that should be disclosed completely and truthfully in the application of term insurance.
Based on this information, the insurer decides the premium of your plan. If you have a history of family diseases such as diabetes, heart attack, etc., term insurance companies associate a high degree of risk and, therefore, charge a heftier premium. However, this safeguards you from any future hassle during claim settlement. But if you do not mention these details properly, there are high chances your claim will be rejected in the future. This could have serious ramifications for your family in your absence.
- Hiding lifestyle habits: Term insurance companies place extreme importance on your lifestyle habits such as smoking, alcohol, etc. This is important because term insurance premiums are heavily influenced by these factors. Smokers usually pay 20-25% higher premiums than non-smokers. But even if it is tempting in the present to hide your lifestyle habits to obtain lower premiums, it is detrimental for the family in the future.
Hiding important habits like smoking, alcohol consumption, etc., can be a big reason for claim rejection. So, even if you get low premiums in the present, your sole purpose of buying the term plan is defeated because you risk your family not getting the claim amount.
- Failure to disclose past insurance policies: A lot of people buy more than one term life insurance plans but fail to disclose the details of these policies in their term plan. Irrespective of whether this act of concealment is intentional or due to unawareness, the result can be claim rejection. Insurance companies are extremely particular about declaring your prior insurance policies.
Irrespective of how small (low sum assured) the term plan is, it is vital to disclose previous policies before taking a new insurance policy. Faltering on this aspect can lead to claim rejection later on. Hence, it is best to be extremely careful.
- Lapse of policy: The biggest threat to claim settlement is the lapse of your term insurance plan. In an insurance contract, you pay premiums as maintenance of your plan. It is mandatory to pay your premiums timely to ensure the policy is active and does not lapse. Claim for your policy will be rejected if your policy has lapsed because of non-payment of premiums.
Term plans like Saral Jeevan Bima allow you to choose a premium payment frequency as per your financial comfort. You can choose to pay premiums monthly, half-yearly or yearly, as per your preference. Be sure to pay the renewal premiums to avoid lapse of term life insurance.
Edelweiss Tokio Term Insurance
Edelweiss Tokio Life offers affordable term insurance plans like Saral Jeevan Bima Yojana to precisely cater to your needs. With the Edelweiss Tokio Life Saral Jeevan Bima plan, you get guaranteed reasonable premiums, best-in-class customer service and easy and speedy claim settlement. Edelweiss Tokio aims to be your support during emotionally and financially challenging times.
Insurance plans like Saral Jeevan Bima Term Insurance are an ideal choice for your and your family’s financial future. However, it is important that you choose the right insurer and disclose all information truthfully without hiding any facts to minimise any chances of claim rejection. Moreover, when choosing the insurer, be careful to check the term insurance claim settlement ratio. Term insurance companies that have a high term insurance claim ratio assure you that the entire experience of claim filing to claim settlement will be successful, simple and convenient.
Neha Panchal - Financial Content Writer
Neha used to be an Engineer by Profession and Writer by passion, which is until she started pursuing full-time writing. She's presently working as a Financial Content Writer, with a keen interest in all things related to the Insurance Sector.