Term insurance is a critical component of financial planning, designed to provide a safety net for your loved ones in the unfortunate event of your demise. Even though it’s never fun to consider, being able to submit a term insurance claim can help a lot when things go wrong.
In this article, we’ll provide a step-by-step insight on how to file a term insurance claim, ensuring that you understand every aspect
What is Term Insurance?
Term insurance is a kind of life insurance policy that offers protection for a predetermined amount of time, or “term.” The insurance company pays the beneficiaries listed in the policy a death benefit if the insured dies within this term.
This benefit’s objective is to provide the policyholder’s dependents with monetary support so they can continue to live a normal life and manage their expenses following the loss of their major source of income.
Types of Claims in Term Insurance
Generally, term insurance claims fall into two main categories:
Death Claims
These are the most common claims and are filed by the beneficiaries upon the policyholder’s death. The death claim triggers the payout of the sum assured, which is the amount of money the beneficiaries will receive from the insurance company.
Rider Claims
Term insurance policies often come with optional riders, which are additional benefits that can be claimed under specific circumstances. Common riders include accidental death benefit riders, critical illness riders, and waiver of premium riders.
For example, if the policyholder had an accidental death rider and died due to an accident, the beneficiaries could claim an additional sum assured on top of the standard death benefit.
How to File a Term Insurance Claim
Below is a detailed breakdown of each step involved in the claim process:
Notify the Insurance Company
The first step in filing a claim is to inform the insurance company about the policyholder’s death as soon as possible. This can be done through a phone call, email, or by visiting the nearest branch of the insurance company.
You may be required to fill out a claim intimation form, which provides the insurance company with basic details about the policyholder and the circumstances of their death.
Gather the Necessary Documents
Once the insurance company has been notified, the next step is to gather all the necessary documents required to substantiate the claim. This is often the most time-consuming part of the process, as it involves collecting various legal and medical documents.
Documents include:
- Death Certificate: The most crucial document for a death claim is the death certificate issued by the relevant authority. Ensure that it is the original or a certified copy.
- Policy Document: The original policy document should be submitted along with the claim. If the policy document is lost, the insurance company may require an indemnity bond.
- Claimant’s Statement: The claimant (beneficiary) needs to submit a duly filled and signed claimant’s statement, also known as the claim form. This form typically requires information about the policyholder, the cause of death, and details of the claimant.
- Proof of Identity and Address of the Claimant: The claimant must submit identity and address proof, such as an Aadhaar card, passport, or driver’s license.
- Medical Records: If the policyholder was under medical treatment before death, all relevant medical records and hospital discharge summaries should be provided.
- Post-Mortem Report and Police FIR (if applicable): In case of accidental or unnatural death, a post-mortem report and a First Information Report (FIR) from the police are necessary.
Submit the Claim
After gathering all the necessary documents, the next step is to submit the claim to the insurance company. The completed claim form and all supporting documents can be submitted either online (if the insurance company offers such a service) or at the nearest branch office.
After submission, the insurance company will provide an acknowledgment of the claim. This acknowledgment will include a reference number, which can be used to track the status of the claim.
Follow Up and Track the Claim Status
Regular follow-up with the insurance company is essential to ensure that the claim is progressing smoothly. You can follow up through various channels, including phone calls to the customer service department, emails to the claims department, or by visiting the insurance company’s branch office.
During each follow-up, you can use the reference number provided in the acknowledgment receipt to inquire about the status of the claim. Most insurance companies offer online tracking of claims. Use the reference number provided during acknowledgment to check the status on the company’s website.
Claim Settlement
Timeframe: The Insurance Regulatory and Development Authority mandates that insurance companies settle claims within 30 days of receiving all necessary documents. If the claim requires further investigation, the company has an additional 90 days to resolve the claim.
Once the claim is approved, the insurance company will process the payment to the beneficiary’s bank account or through a check, depending on the option selected during claim submission.
Common Mistakes to Avoid When Filing a Term Insurance Claim
Filing a term insurance claim can be straightforward, but there are common challenges that beneficiaries may face during the process. Being aware of these challenges and knowing how to address them can help ensure a smoother claim experience.
Missing or Incomplete Documentation
One of the most common challenges in the claim process is missing or incomplete documentation. This can significantly delay the claim settlement. To avoid this, double-check the list of required documents before submission and ensure that all documents are complete and accurate.
Discrepancies in Information
Discrepancies in the information provided in the claim form, such as mismatched names or incorrect policy details, can lead to claim rejection or delays. Always verify the accuracy of the information provided on all forms and documents before submitting them.
Delays in Claim Processing
Sometimes, the claim process can be delayed due to reasons beyond the claimant’s control, such as the need for further investigation by the insurance company. In such cases, regular follow-up with the insurance company and providing any additional information or documents requested can help expedite the process.
Claim Rejection
In some cases, the insurance company may reject a claim if it finds that the death was not covered under the policy terms, such as deaths due to suicide within the first year of the policy or if material facts were not disclosed at the time of policy purchase.
To avoid claim rejection, ensure that you fully understand the policy’s terms and conditions and provide complete and accurate information when purchasing the policy.
Conclusion
Filing a term insurance claim can be a complex and emotional process, especially during a time of loss. However, understanding the steps involved, the documentation required, and the common challenges can help you navigate the process more effectively.
By following the guidelines outlined in this article, you can ensure that your loved ones receive the financial support they need during difficult times.
