Top 5 reasons why life insurance claims are rejected

Every year some of the insurance claims get rejected. Why do the life insurance claims get rejected? The nominees blame the insurance companies, but the policy-holders are mainly responsible for such rejection. Know the reasons for rejection of life insurance claims and avoid these mistakes when you go to take a new policy.

All of us are ignorant of our fate. We don't know how long we would survive on this earth. As our future is uncertain, we try to protect our family members and dependents. Insurance provides a protective umbrella in case of any untoward incidence like death or any other accident to the earning member(s) of the family.

People of India have now become more conscious about the needs for various types of insurance like life insurance/term insurance, medical insurance and various other types of insurance. The basic purpose of these insurances is to provide financial safety to the dependents. But, while we think that in case of sudden demise of the earning member(s) of a family, these policies will help the other members of the family, but in actuality, some of the insurance claims get rejected. In this article, we will try to find out why insurance claims get rejected, to try to avoid these mistakes in the future.

Reason #1 for rejection of claim: Incorrect details

In many cases it has been noticed that when a person wants to take a new policy, he/she doesn't fill up the lengthy form himself/herself. The person askes the insurance agent to fill up the form. The agent ensures that the name and date of birth of the person are indicated correctly, and hurriedly fill up the other columns. As a result, there are many inaccuracies in filling up columns like family history of diseases, previous history of hospitalization of the person, etc. As a result of inaccurate/false information, in case of death/accident of the policy-holder at a later stage, the nominee's claim gets rejected.

Reason #2 for rejection of claim: Incorrect job details

If a person's job profile is such that have some hazards, he/she will have to more premium to cover the danger/hazard associated with his/her work. But in many cases, to lessen the burden of premium, such a person does not clearly indicate this while filling up of the insurance form. This suppression of information may cause rejection of a claim by the nominee if the person dies due to hazard associated with the work.

Reason #3 for rejection: Willfully concealing pre-existing disease

In case of health-related cover, it is very much necessary for the policy-holder to indicate any pre-existing disease. In case the policy-holder fails to do so and if the death is due to the pre-existing disease, there is a real chance of rejection of the claim of the nominee of the policy-holder.

Reason #4 for rejection: Delay in claim filing

In many cases, it has been noted that the nominee files the claim after elapse of many days. It must be remembered that the claim must be filed within a stipulated period. So, in case of demise of the policy-holder, the nominee must obtain the death certificate at the earliest and file insurance claim quickly, preferably within 21-30 days.

Reason #5 for claim rejection: Lapse policy

People associated with the insurance sector tell that this is the major reason for rejection of claim. Many policy-holders forget to pay the premium in time and this causes the lapse of the policy. The nominees generally are not aware of such lapse of policy due to non-payment of premium or some other reasons. In case of death of the holder of such lapsed policy, the nominee's claim gets rejected.

Some words of advice

As already stated that insurance works as a protective umbrella. But if the claims get rejected, the umbrella stops functioning at the time of need. So, the future policy-holders must fill up the insurance application forms correctly. They should do it themselves, should not conceal pre-existing diseases and also pay the premium regularly. In case of the death of the policy-holder, the nominee must submit the claim within the time-limit. Such simple steps will prevent rejection of the claim in case of death of the policy-holder(s).

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Author: Reena Upadhya15 Sep 2018 Member Level: Diamond   Points : 8

Author has very well explained the top 5 reasons that why life insurance claims get rejected.

Another reason for getting life insurance claim rejected is not appointing or updating details of a nominee. As soon as you buy a life insurance policy, first and foremost thing you need to do is to appoint a nominee and thereafter update every detail of nominee as and when required. You need to appoint a nominee who will be able to claim in case any uncertainty takes place. During the early days when the people are young, they nominate their parents. When they get married, they make their life partner as nominees. Sometimes they just forget to update the nominee details or else completely forget to appoint one. In case the parents or life partners have suffered death, they need to appoint someone else as their nominees. However, they fail to do so and lose track of time. An insurance policy is going to pay the claim only to the appointed nominee. In case there is no nominee, claims cannot be made. You can change the details of nominee and update as and when required. You need to inform everything to the life insurer. Every now and then you need to update status, material changes and details related to the nominee.

Life insurance claims are also rejected in those cases where death occurs in the contestability span of time. Life Insurance Company is definitely going to look at you with suspicion if death has occurred within a few days or weeks after buying a policy. It is seen as an act of mistrust. There is a period known as the contestability period that lasts for 1-2 years. It commences as soon as the policy is issued. The death that takes place during this period is seen with suspicion and life insurer can rightfully reject the death claims. There will be investigations to find out the accuracy of the information that was provided during the filling of application.

Author: Sanjeev Gupta08 Nov 2018 Member Level: Diamond   Points : 1

Nicely explained by the author of a possible reason why life insurance claims get rejected.

One thing I must add that one should read the document thoroughly while taking any insurance policy. Also, it should be clear that no insurance company rejects your claim intentionally, it is because of the reasons mentioned in the article they reject the same. Always follow the above-mentioned points to allow your family to have an easy claim settlement process. Remember, all genuine claims are settled by life insurance companies, they don't normally reject them unless there is some fault while the claim.

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