As we all know, there are many types of life insurance policies available in India. The primary goal of a life insurance policy is to insure against the policyholder’s death risk. Term insurance on the other hand has the simplest and most transparent claim structure among all types of life insurance policy. However, this is also the aspect that many people don’t know about and in this article, we will explain to you the various types of term insurance claims and the process involved in settling them.
What exactly does the term insurance claim entail?
It is a request made by the policyholder’s beneficiary or nominee to have the death benefit paid out after the unfortunate demise of the policyholder’s death within the policy’s term. The sum assured, as stated in the term insurance policy contract, is the amount that the nominee has a right to claim. The life insurance company will pay the relevant benefits under the terms of the policy after verifying the documentation.
Types of Term Insurance Claim
To get all benefits and payout that are due, it is crucial to understand the terms and conditions of the life insurance policy before submitting a claim. A nominee or beneficiary may submit one of three kinds of term insurance claims to the life insurance provider. They are as follows:
- Death benefit claim
- Maturity benefit claim
- Rider benefit claim
One has to understand that not all term insurance policies have to offer the nominee all three benefits. All term plans have death benefits, but some might also have rider benefits or term insurance with a “return of premium” feature.
Claim Process for Death Benefit: The amount guaranteed to the insured’s family or nominee in the event of the policyholder’s death during the policy’s term is known as the death benefit claim in term insurance. Depending on the policy conditions chosen by the policyholder when purchasing the term plan, the death benefit claim amount is paid to the nominee or beneficiary in a lump sum or in installments after the necessary document verification has been completed.
Claim Process for Maturity Benefit: Since a term life insurance plan simply covers the risk of death and has no investment element included in the plan policy, it often does not offer a maturity benefit. The policyholder does not get any maturity benefit when the term insurance policy expires. However, if the policy has the “return of premium” option, the policyholder may be eligible to get maturity benefits. The policyholder is therefore eligible to receive the premium amount as a maturity benefit claim if they survive the policy tenure.
Claim for Rider Benefits: You are entitled to file a rider benefit claim at any time if you have purchased an add-on rider, such as a disability, critical illness, or accidental death coverage/ Similar to a death benefit claim, a rider benefit claim may be made at any point during the policy’s term, and the policyholder or nominee will get a lump sum payout following the necessary verification.
Documentation Needed to File a Term Insurance Claim
For the timely and seamless death benefit payout process to happen, the nominee is required to do the proper filing of the necessary documents.
- Original certificate of life insurance policy
- In the event of a death benefit claim, the policyholder’s death certificate is required to be attached
- A copy of the patient’s medical records and other certifications indicating the cause of death
- Verification of the nominee
- Address proof of the nominee making the claim
- Duly filed claim form
- A duplicate of the cancelled check
- Any additional paperwork that the insurance provider requests
How Are Claims for Term Insurance Settled?
The following steps are involved in the settlement of a term insurance claim:
Step 1: After the demise of the policyholder, the nominee should make the claim for the death benefit as soon as possible. Filling out the form is the first step in notifying the insurance company. The policy number, the cause of death, the date and hour of death, and other information about the nominee are all included in the claim form. Every detail needs to be precise.
Step 2: You must submit all of the documentation requested by the insurance company after filing the claim form. Since the life insurance company will only transfer the benefit amount following appropriate verification, all of the documents must be genuine. Any errors in the paperwork will cause the claim settlement to be delayed or denied.
Step 3: In accordance with the provisions of the policy, the insurance company must pay the claim amount or sum assured within 30 days of the documentation being verified.
When Can a Claim for Term Insurance Be Denied?
Nobody wants the death benefit claim process to be rejected. The nominee’s family is already reeling under the pain of the policyholder’s death and the rejection could further affect them. Here are the common causes behind claim rejection so that you don’t do it when you are filing the claim.
- Not supplying all the paperwork needed to complete the claim settlement process.
- The claim form contains inaccurate information
- The policy does not cover the type of death for which the nominee has filed a claim
- When purchasing the term plan, the policyholder concealed a pre-existing condition that ultimately led to their demise.
- The information which policyholders gave at the time of purchasing the term plan did not correspond with the nominee’s details.
- The nominee is attempting to obtain the death benefit amount via deceitful means.
So we are saying,
Including term insurance in your financial plan helps to safeguard both your wealth-generation plan and the financial future of your loved ones.
You should explain the policy and its benefits to your nominee or family when you purchase a term plan. This is a crucial step to make sure that, in the event that a crisis happens, your loved ones or family members have no difficulty filing term insurance claims and getting all of their due benefits.
