Nov 23,2022 | 9 min read

INSURANCE CLAIM REJECTION AND IT’S REMEDIES

 

Although death is unavoidable, the effects can be lessened with careful planning and awareness. Many people support their families as the only source of income. The people who depend on them suffer consequences from their untimely and unexpected passing. Responsible people choose a solid life insurance policy and live calm lives knowing that their family will be financially covered in the event of their passing. 

But, sometimes even the best efforts are in vain. Sometimes life insurance claims are frequently denied by insurance providers and one may cringe at the mere prospect of a term insurance claim being denied. This is so that, in the event that the funds that the family had anticipated would arrive do not, they are not left in a state of shock after the policyholder's passing.

Their financial situation is severely impacted by the loss of their primary earner. The family is left in the dark and in severe need of stability and financial security after an incident like this. It is crucial to be aware of the potential reasons a claim can be denied in order to prevent adding to the suffering during a difficult time. These are:

1. Pre-existing Policies:

People frequently make the error of ignoring the requirement that they reveal to the new insurer their current policies under the policy declaration rule. Many consumers are unaware of this. No matter how little or much your sum insured is, be sure to let your insurer know. Your claim will undoubtedly be rejected if you don't comply.

 

2. Lack of Transparency: 

It is crucial to be completely honest when providing the insurers with the relevant information when applying for a term insurance coverage. This is crucial because a term insurance policy gives your insurer a better chance to protect you by providing a way to secure your family's financial future. Hiding important information from the insurance provider only increases the likelihood of rejection. However, you can prevent this from happening if you make sure to give precise and truthful information about things like age, occupation, income, and specifics of any current policies.

 

3. Truthful Information:

It is crucial to be completely honest when providing the insurers with the relevant information when applying for a term insurance coverage. This is crucial because a term insurance policy gives your insurer a better chance to protect you by providing a way to secure your family's financial future. Hiding important information from the insurance provider only increases the likelihood of rejection. However, you can prevent this from happening if you make sure to give precise and truthful information about things like age, occupation, income, and specifics of any current policies.

 

4. Premium Payment:Just getting the right life insurance is the first step; you also need to     make sure the premium is paid on time. Only when payments are paid on time does a life insurance policy become active. The insurance may lapse if a premium is not paid on time, and an insurer may reject a claim under a lapsed policy. Insurance companies typically notify policyholders via emails and text messages when they mistakenly neglect to pay their premium on time. The grace period offered by insurance carriers is typically 30 days. All previously paid premiums are lost if an insurance lapses, and there is no way to recover them.

 

5. Period of Contestation: Companies include a contestability clause in the policy while selling life insurance. This means that a claim may be denied if a death occurs soon after purchasing a coverage. The contestability period starts the moment an insurance is purchased. A contestability period for insurers can be between one and two years. If a death occurs during that time, insurance companies can get suspicious and start an investigation. Even though suicide claims are denied, death happens suddenly.

 

6. Neglecting Medical Test: Insurance is a dangerous business, and insurers rely on accurate evaluation to lower the risk. In order to accurately assess the risk, insurers confirm each medical tidbit provided by a candidate. Most businesses run medical examinations, particularly when offering high-risk or coverage for those who are older. The likelihood of your claim being denied by the insurer due to a pre-existing condition is very high if you decline to do the tests. Going for medical tests is usually a good idea because if one is taken, all pre-existing conditions are covered by the insurance.

 

REMEDIES AND SOLUTIONS IN CASE OF REJECTION OF INSURANCE CLAIM:

In order to efficaciously deal with the rejection of the insurance claim, the insurers must do the following:

  1. Be sure to explain the entire term insurance claim process to your nominees, including the documentation required to lodge a claim.
  2. Always provide complete, accurate, and honest information when buying a term insurance policy. Before completing the proposal form, make sure all of the information on it is accurate and full, including your personal and medical information as well as any details on the policy.
  3. Remember to pay all premiums on time and without incurring late fees.
  4. Speak with your insurance provider if your policy has run out of time to see if there are any possibilities for renewing the protection.
  5. If the insurance provider requests a medical examination, be careful to schedule the appointment as soon as you can.
  6. You should always give the nominee's information when buying a term plan. In addition, make sure you immediately update the nominee's information 

 

LEGAL PROCEDURE TO BE ADOPTED BY POLICYHOLDER FOR CLAIM REJECTIONS:

  1. First, registering an online complaint on the website of the Insurance Insurance Regulatory and Development Authority.

  2. Approaching Insurance Ombudsman in accordance with Redress of Public Grievances 1998 Rule 12

  3. Utilization of Alternative Dispute Resolution (ADR), in accordance with any applicable policy

  4. A consumer forum or court of law approach. You can file a complaint with the Department of Consumer Affairs.

  5. In case of Motor Vehicle accident and the rejection of claim by the Insurance company, a person can file his/ her application for compensation under section 166 of Motor Vehicle Act, 1988 in MACT i.e. Motor vehicle Accident Claims Tribunal, who will have the jurisdiction to decide the matter if the accident has occurred in his area of jurisdiction.

Conclusion:

You won't have to worry about your term insurance claims being rejected at all if you strictly follow the aforementioned recommendations. If you haven't yet begun protecting your family's finances in the event of your leaving, you need to do so immediately.

 

Reference:

1.https://www.thehindu.com/business/Economy/denial-of-claim-is-not-the-end-of-the-road/article34403127.ece

2.https://www.thehindu.com/business/Industry/how-to-avoid-rejection-of-an-insurance-claim/article38346408.ece

3.https://www.policyholder.gov.in/uploads/CEDocuments/Repudiation%20of%20Claim%20Circular.pdf

4.https://www.iffcotokio.co.in/health-insurance/4-reasons-why-your-health-insurance-claim-could-be-rejected

5.https://life.futuregenerali.in/life-insurance-made-simple/life-insurance/7-reasons-why-life-insurance-claim-may-get-rejected#:~:text=Out%20of%20the%20many%2C%20some,updating%2f Providing%20the%20 nominee%20details

 

 


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ABOUT THE AUTHOR


Ritesh Dhir

The counsel is most suitable to advice you in : Matrimonial issues, bail matters, accident matters, employer issues, insolvency matters, court martials and conducts mediation/counselling.

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