An individual buys a life insurance policy to ensure that the dependent family members do not have to suffer financially after the policyholder’s demise. However, it also becomes important for a policy buyer to explain to the beneficiaries about the policy’s features and important points that should be considered when making a claim
Having an adequate life insurance policy can financially help dependent family members on the death of the policyholder. Usually, the policyholders buy an insurance policy to cover their life risk after studying the applicable terms and conditions of the policy.
However, often the features as well as the terms and conditions of the policy are not explained to the beneficiaries, due to which they find problems at the time of claim processing.
So, here are three things that beneficiaries should know to avoid life insurance claim rejection.
An exclusion list is provided with the policy document that every policyholder and their beneficiaries should be aware of. An insurance claim can be rejected if the cause of death is related to any of the issues mentioned in the exclusion list. The exclusion list for which the claim can be rejected includes reasons, such as death due to pre-existing health conditions, due to involvement in illegal activities, suicide, and so on. So, the claimant needs to be careful when providing details related to the death of the insured.
Usually, life insurance companies require the claims to be filed within 30 days of the death of the policyholder. However, the prescribed time limit may vary from company to company and also depends on the reasons and circumstances of the death. A delayed claim is often taken with suspicion by the insurer. So, the beneficiary should file the claim as early as possible after the death of the policyholder.
At the time of claim, the insurer may ask for details, such as a death certificate, duly filled claim form, copy of the policy document, and identity proof of the beneficiary along with the bank account details and statement of the claimant, among others.
If any of the details provided at the time of claim are found to be incorrect, it may lead to a claim rejection. The claimant must verify all the details carefully before submitting the documents to the insurer.
The policyholder must explain the claim process in advance to the beneficiaries to avoid a chance of rejection later on. Insurance agents can also extend a helping hand to the beneficiary when they have to make a claim. As such, the policyholder should introduce their insurance agent to the family members for convenience in the future.
The author is an Independent Financial Journalist