How you can avoid Insurance Claim Rejection
An insurance claim can be rejected for lot of reasons like hiding of important information related to your family and personal details, medical history, providing wrong information in the insurance proposal form, invalid nomination, lapse of insurance policy etc. Insurance is the most important component in risk cover to secure you and your family from unforeseen events. The main reason of taking an insurance cover is to safeguard your family from financial challenges when you are not there. But, a denial from your insurer to settle the claim can add woes to any grief stricken family. In order to keep oneself foolproof against such denials, it's necessary to be cautious while buying the plan and re-examine the details of the policies which you already hold.
Main Reasons for Insurance Claim Rejections
(1) Hiding of important information – Insurer fixes the premium based on the information provided by you which includes your age, occupation, liquor/tobacco intake, pre-existing diseases, family history, details of other policies that you hold etc. It is a mistake to conceal facts in order to lower the premium amount as it can backfire. Disclosure and reporting of facts are entirely the responsibility of the insured; therefore, 'do not' conceal any material facts while taking life insurance.
(2) Lapsed Insurance Policies – Claims can be settled only when the policy is active. So, it's important to put a reminder for yourself of the premium payment due dates. Forgetting to pay the premium within the grace time can result in policy lapse and the claim made even after a single day of such lapse will be rejected by the insurer.
(3) Absence of Valid Nomination – Information pertaining to the nominee is very essential as he/she will be the actual beneficiary when the claim is made. Therefore, take caution that this space is kept updated at all times. If the nominated person in an application dies before the policy holder then change the nominee in the policy immediately. Also, it is common for an unmarried man to name his parents as nominees. But, after marriage he should ideally make his wife as nominee, as there are chances that at the time of death of the insured, his parents may also be deceased.
(4) Discrepancy in the insurance proposal form – Most of the people entrust their agents or advisors with the work of filling up the form without realizing that a single miss out of fact can jeopardize their insurance plans. This can be easily managed if you sit with your agent (or online) and fill up the form yourself as chances of missing any fact will become rare and you would also be assured that you have complied with all the details asked in the form. It is also advisable to keep a copy of the filled form with yourself.
(5) Medical History – Although most of the insurers demand a compulsory medical test to be done before approving the proposal, however there are few who waive-off this condition. It is always in the best interest of the insured to have his medical test done to rule out the possibility of having pre-existing disease as a rejection reason. Moreover, ensure that any material medical history of you or your family is intimated to the insurer.
It is very important to review the matters printed in the Insurance Policy document once you receive it. verify the details mentioned therein with that provided by you. Report any mismatch/error to the insurer immediately and ensure that it gets rectified. In the event of a claim, the claimant has to provide the mandatory documents for smooth settlement of claim. The whole process, if followed unfailingly, can curtail the claim rejection possibilities to a greater extent.
Best Regards
Prakash Nair
Certified Personal Financial Advisor (CPFA)
