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Term Insurance Claim Rejection Reasons You Must Know

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March 16, 2019

A term insurance plan is the one that offers guaranteed protection at all times for the future requirements of your loved ones and acts as a guaranteed protection for the futuristic benefits of your loved ones. A term insurance plan is allocated only after the insurance provider validates the economic viability of investment for an eligible person. This means that for people who come under the high-risk category for an insurance provider, the terms and conditions of the insurance plan are much more strict and limited. A traditional term insurance plan offers guaranteed coverage that entitles the policy holder’s nominee(s) to receive the main plan benefits i.e. the sum assured in the event of the policy holder’s demise during the policy term. Although there are no maturity benefits in case the policy holder survives the policy term, yet there are certain insurance providers that offer the clause for return of premium option that entitles the policy holder to receive the paid premiums in the event of maturity of the policy term.

While filing the claim for a term insurance, there is a risk of the claim being rejected due to certain factors.

Following is an overview of the probable reasons for the rejection of term insurance claims:

  1. Withholding of required information:

    This is one of the very common reasons that can lead to a claim being rejected by the insurance company. While purchasing a term insurance plans, it is mandatory for the applicant to declare all the relevant information clearly and coherently. Any mistake or deliberate effort to withhold any information can have serious repercussions later on and the claim may get rejected.

  2. Not disclosing information about the previous policies held:

    As per the IRDAI’s mandates, not disclosing or giving incorrect information about the policies that an applicant is currently holding or has previously held can entitle the insurance provider to reject the claim altogether. The disclosure of the previous information does not depend on the sum assured and it must be noted that at the time of policy purchase, disclosing all this and the relevant information is very crucial.

  3. Incorrect information about employment:

    Insurance providers declare a list of jobs and/or work portfolios that are considered to be high-risk ones. This may include jobs or employment terms that are linked to hazardous portfolios. Not disclosing the correct information about this can lead to the claim being rejected.

  4. Incorrect information about medical history:

    Defaulting on the medical test or submitting incorrect medical information is a serious danger to the policy claim being entertained later on. It is mandatory that all the relevant tests are done and the correct reports about the current medical history and about any pre-existing medical conditions are completely and truly submitted, so that no such problem arises at the time of claim processing.

HDFC Life offers various term insurance plans that are directed towards securing the financial future of your loved ones and at streamlining the monetary reserves for their exclusive benefits. For details, click on the mentioned link:  https://www.hdfclife.com/term-insurance-plans.

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Francis Rodrigues Francis Rodrigues

Francis Rodrigues has a decade long experience in the insurance sector, and as SVP, E-Commerce and Digital Marketing, HDFC Life, manages the online sales channel, as well as digital and performance marketing. He has had hands-on experience in setting up sales channels and functional teams from scratch over a career spanning 2 decades.

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Vishal Subharwal Vishal Subharwal

Vishal Subharwal heads the Strategy, Marketing, E-Commerce, Digital Business & Sustainability initiatives at HDFC Life. He is responsible for crafting and ensuring successful implementation of the overall organisation strategy.

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