A term insurance policy can be one of the greatest financial support after you for your family. The emotional turmoil backed with financial crisis after the demise of the single earning member haunts most of us. Thus, we all opt for a term insurance policy to secure the future of our loved ones after us. However, there can be instances when a term insurance claim can get rejected. This can be a horrific situation for a family during the time of mourning. So it is always good to be careful beforehand and know why your claim can be rejected and how to avoid them.
The only way to avoid an unforeseen claim rejection is to be careful while reading and understand the clauses. If you neglect this part, there’s no way you can make up for it later. Reading the terms and conditions is the most important thing to do before buying a term insurance policy.
Know about 6 common reasons for term insurance claim rejection:
- Incorrect information in the application: Providing with incorrect information in the application will undoubtedly lead to claim rejection. It is very important that one provides the exact information about their age, weight, height, occupation, income, other policy details etc. Your insurer needs to have all the details about you that are mentioned in the application form. Before filling up the form for a term insurance policy, make sure you have all your information checked.
- Hiding Medical History: Your medical history plays a major role in deciding the rejection or acceptance of the claim. Initially, it decides the insurance amount and premium of the plan. Make sure you reveal details about your health, habits like smoking etc. Hiding such crucial information can lead to a claim rejection.
- Specifying the nature of your job: Some occupation involves high or medium life-threatening risks. Such specifications should be communicated to your insurer without fail. In case, your insurer is not informed from the beginning, they might reject your claim later.
- Not taking medical tests: The higher assured sum of insurance needs you to take medical tests. Based on your medical tests the risk analysis is done by the company before deciding upon the premium and assured amount. In case you ignore this, later your claim can be rejected.
- Lapse of the policy: If your policy lapses due to non-payment of premiums, then there is no question about the claim to be passed. It is necessary that you pay your yearly premiums on or before the due date to keep your term insurance policy active. In case you miss the due date, there are a few days of grace period given within which you can pay your premiums or your policy will lapse.
- Not disclosing other policies: Many people do not know the policy declaration rule and go ahead to buy more than one term insurance policy without disclosing about the existing policy to the new insurance company. The companies are very strict about this and claims can be rejected in case the policyholder is found to have more than one undeclared term insurance policy. So, remember to declare your existing policies when purchasing a new term insurance policy.