Life insurance claim rejection can be a scary thing!! Life insurance is the best way by which you can ensure the financial security of your loved ones in case of your untimely demise. However, your family can only avail of the benefits of life insurance if the claims are filed successfully and are settled in a hassle-free manner. Usually, Life insurance providers would give a lot of importance to their fast and effective claim settlement procedure. But, in reality, certain claim rejections are bound to occur.
Top 5 Reasons for Life Insurance Claim Rejection
You must be aware of the fact that filing a claim does not guarantee that your claim amount would be disbursed. There can be various reasons based on which insurance providers can reject your life insurance claims.
1. Not Disclosing or Wrongful Disclosure of Your Facts
This is one of the major causes for the rejection of life insurance claims. There are some essential factors based upon which the premium and risk coverage of your life insurance policy is determined. These factors are your details such as your age, your health condition, profession, age, etc. If the checking is being carried out by the insurance provider, the company feels that there has been misinterpretation then your claim would be rejected.
It is your responsibility to provide all correct information in the insurance form such as pre-existing conditions must be mentioned correctly. It might be possible that your insurance provider has put some wrong detail; you must read your policy document carefully and highlight any such information to the company.
2. Avoiding Medical Tests
Every medical detail entered by you in the insurance form would be verified by the insurance provider especially in case of higher age or higher risk coverage. Most of the insurance providers perform their medical tests. Your premium would be decided based on any illness you have or if you are at any risk. If you are avoiding any such medical tests, then it is highly probable that the company can reject the claim stating it as a death due to pre-existing conditions.
You should go for these medical check-ups so that even if there are any pre-existing conditions, it is known and the coverage can be obtained based on it. Medical tests reduce the probabilities of claim rejection in the future.
3. Not Appointing or not Updating Details of Your Nominee
If you have purchased a life insurance policy immediately after you started working, then it is quite obvious that your parents are the nominees. However, these nominee details remain as such and are not updated even after the demise of your parents or after your marriage. So, in case a claim is made in the future the insurance providers do not find the appropriate nominee to whom the amount must be disbursed. This can cause a claim rejection.
In case of your unfortunate demise, your family members might claim a death benefit for reasons which are not included under the life insurance policy taken by you. There are certain exclusions present in each life insurance plan such as a death occurring due to suicide, death occurring due to alcohol/drug overdose, etc. These exclusions are mentioned in your policy document and should be understood properly to avoid claim rejections.
5. Lapse of the Policy
In case you are not paying your insurance premiums properly on time, your insurance policy would lapse. The grace period is provided by life insurance companies to pay the premium within an additional period if you have not been able to pay your premium. However, if you do not pay your premiums on time then your policy would lapse. Any claims made in the future if your policy has lapsed would be rejected. So, you must remember your premium payment dates and pay them to avail of the benefits of your policy.
So, now since you are aware of some of the major reasons causing a life insurance claim you should remain alert, provide your necessary details correctly and read your policy document carefully. A little bit of caution today can avoid your family members from getting into trouble in the future.