Life cover and health insurance plans are important for the financial security of yourself and your family. Several insurers offer different types of life policies to encourage individuals to avail of such coverage. While selecting the insurer you must consider is the claim settlement ratio. A higher claim settlement ratio is preferred because you are assured of receiving the benefits under the chosen insurance plan.
Several insurers use their quick, transparent, and efficient system of settling claims as a marketing strategy. However, you must understand that irrespective of how transparent and efficient the system is, there is always a possibility of your claim being rejected.
When you file a claim, there is no guarantee that you will receive the reimbursement. In certain situations, the insurance company may reject your claim. Here are five common reasons why the insurer may reject your claim.
1. Non-disclosure or wrong disclosure of information
Providing incorrect details or not disclosing relevant information while purchasing the life insurance plans is the most common reason for claim rejection. Insurers consider your information, such as age, medical history, profession, and current health conditions while determining your eligibility and the premium. Therefore, when such relevant information is not provided or misinformed, the insurer may reject your claim. This is why it is important that you provide accurate information about any pre-existing conditions to ensure your claim is not rejected in the future.
2. Lapse in the policy
You need to pay the premium at a pre-determined interval for continued coverage. If you fail to pay the renewal premium on or before the due date and during the grace period your insurance plan will lapse. Any claim filed on a lapsed policy is inadmissible and rejected due to non-payment of the premium.
3. Nominee details
Often, insurance is used to save taxes. You may probably purchase life insurance without completely understanding the terms and conditions as well as the claim procedure. You may also overlook the need to provide nominee details to the insurer. Furthermore, you may not have updated this information in case of any changes. If a claim arises, the insurer may reject it because the company does not have the updated nominee details and therefore may not have the information as to who should receive the benefits. Therefore, it is important you provide updated nominee details in case of any changes without delay.
4. Avoiding medical tests
If you are old, the insurer may perceive you as a high-risk because of medical complications. Most insurers require you to undertake medical tests before you purchase the policy for such verification. If you avoid undergoing these tests, the insurer may reject your claim. The company may state that your medical condition was pre-existing and will not pay you the claim amount. Therefore, undergoing the medical tests to eliminate pre-existing conditions or opting for their coverage before purchasing the policy is important. This ensures your claims related to these conditions are not rejected in the future.
5. Exclusions and omissions
The policy document clearly states the exclusions and omissions. These are conditions when the insurance company will not pay the claim. Some of these include substance abuse, accidental death due to intoxication, and suicide. If you pass away because of the excluded and omitted conditions, your nominee will not receive the benefits under the policy.
Life cover is crucial to meet the uncertainty of the future. Availing of an insurance policy ensures the financial stability of your family in case of your sudden demise. You often pay a high premium to avail of such coverage and enjoy peace of mind. You do not want your family members’ claim to be rejected in case of your premature demise, which would leave them in a financially distressed situation. Therefore, you must clearly understand all the terms and conditions before signing the policy.