4 reasons why term insurance claims get rejected

A term insurance protects your family in an unfortunate event. Here are few aspects which you should be mindful of while signing up for a term plan. 
Jan 2023
3 mins read
One of the most upsetting events is having your term insurance claim getting rejected. Even after doing all the due diligence while purchasing the policy, claims could be denied by the insurance firm. Here are a few reasons why term insurance claims get rejected and how to avoid them.

  1. Incorrect Information
    An insurance policy is a trust-based agreement between the policyholder and the insurance firm. While the policyholder believes that the insurance company would honour their claim, the insurance company believes that all information is accurate. The insured's information is accepted at face value.
    Nonetheless, one may be tempted to withhold their personal information to save on the premium. The simplest method to avoid such a situation is to ensure that all data provided is accurate. Any changes about the information provided should be disclosed to the insurer in a timely manner.
  2. Nonpayment of premium
    Nonpayment of premium is one of the most typical cause for untimely lapse of a term policy. Only claims for active insurance plans are paid out. A lapsed policy will not provide you with any advantages. Unintentionally, a policyholder may neglect to pay the premium. In such a scenario, the insurance company sends a reminder by email, phone, and text message to pay the premium. The company may also offer a grace period of up to 30 days to pay the premium, which depends on the frequency of the premium paying term (monthly, quarterly or annually). Policy benefits usually remain in force during this grace period.
    To avoid this situation, set up an auto-debit or Electronic Clearance Service (ECS) instruction with your bank so that the premium is paid out on the due date and your coverage remains active. Conversely, making a payment timetable and sticking to it is effective.
  3. Undisclosed Existing Policies
    It is essential to share your current and past insurance policy details when buying a term plan. Withholding or concealing such information may result in your insurance claim getting rejected. Always pay great attention to the information you offer to your insurance company and preserve a copy for future reference.
  4. Failure to disclose medical history
    Your medical history is important because your health has a significant impact on claim acceptance/rejection. The proposal’s most important section is that of the proposer and her/his family. Based on this information, the insurer will determine the premium. Make sure you provide all pertinent information about you and your family's medical history. It is also critical to mention any habits that negatively impact your longevity, such as use of alcohol and tobacco. To avoid claim rejection, be very specific in declaring these details.
    You should disclose all information when signing up for term insurance by being completely honest and straightforward. Not divulging crucial information could result in the claim getting rejected.
PGIM India Asset Management Private Limited
(CIN - U74900MH2008FTC187029)
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