Key promise of Insurance Policy is paying Insurance claim in case of occurrence of insured event. Life Insurance is bought for the dependents who were financially dependent on the insured person. It is said that financial loss can be compensated but emotional loss cannot be compensated.

Insurance business works on the trust which is built on timely payment of claim when the need arises. In case the claim is repudiated then public looses trust on insurance as a system and every one suffers.

It is necessary that we understand the reasons of repudiation which are detailed below:

  1. Suicide deaths: In case suicide take place in the first 12 months      of a new policy then Insurance Company would not pay claim but may refund      the paid premium. This exclusion is done to avoid the moral hazard which      means that no one should buy insurance with the purpose of committing      suicide.
  2. Non disclosure of material facts : Material facts are those facts      which affects the occurrence of insured event like medical conditions ,      habits like smoking , hobbies like adventure sports , occupation like fire      worker .In case these facts are not disclosed then the insurance      company may reject the claim even if the cause of death is not same .
  3. Occupation Hazards: Insurance contract is taken on      the basis of declarations in the Proposal Form and underwriters evaluate      the risk on the basis of occupation hazards. However, there is no need to      declare the hazards post the issuance of contract. Insurance Company cannot      deny the claim if insured has taken a hazardous occupation after the      issuance of insurance.
  4. Smoking / Tobacco Consumption / Alcohol: All these habits can lead to      claim repudiation if it was not declared at the time of policy issuance.      However, if insured has begun any habit post contract the claim cannot be      repudiated .
  5. Breaking the Law: Death due to the commission of      a crime or breaking the law of the land can lead to the policy holder’s      claim lead to the insurance holder not getting any payouts from the      insurance company as well.
  6. Death outside India: Insurance plans remain valid      even after the policy holder changes his country of residence. The      insurance company in such a situation must be notified if the policy      holder wishes to settle abroad. This can involve informing the company      about the new country of residence in order to claim the settlement later.
  7. Terrorist Attacks: Insurance Contract is an      universal contract and cover death under all circumstances. There is no      exclusion of terrorist attack. However, there are delay due to non      availability of Death Certificate, FIR and other evidence . In case all      details are available then claim would be paid.
  8. Natural Calamities: As said earlier, all contracts      are universal and cover death under all natural calamities. Problem      happens only if documents are not available like death certificate and      confirmation by authorities. Many times , insurance companies release part      payment as compensation and do final settlement after receipt of documents      
  9. Adventure Sports: Death from taking part in      adventure sports such as bungee jumping, power boat racing, skydiving or      motor sports are covered if it was declared at the time of policy commencement.
  10. Homicide:      The insurance company has the right to withhold or reject the claim if the      nominee is accused of homicide (murder), until criminal charges are      dropped or the nominee is acquitted.

Having a life insurance in place is the best way to secure not only your future, but also those of your loved ones as well. However, an oversight or a mistake on your part in filling up the form can leave you vulnerable. Thus, it is important to know the grounds on which your claim can get rejected, so you know what you are signing up for.