Losing someone dear to you is never easy. On top of the emotional toll, handling financial matters like claiming term insurance after death can feel overwhelming. But don’t worry—you’re not alone in this. If your loved one had a life insurance policy, you are entitled to the benefits, provided you follow the right process.
To make things easier, we’ll walk you through the stepwise procedure to claim life insurance benefits, the documents required, and key factors to consider before filing a death claim. We’ll also cover the types of deaths covered and the common term insurance claim rejection reasons so you can avoid unnecessary delays.
Why is Proper Documentation Key to Claim Success?
A well-documented claim significantly improves approval chances. In 2024, the claim settlement ratios (CSR) of top life insurance companies in India highlight how insurers process claims when proper documentation is provided:
| Life Insurance Company | |
| Max Life Insurance | 99.65% |
| Canara HSBC Life Insurance | 99.23% |
| Edelweiss Life Insurance | 99.23% |
| Bharti AXA Life Insurance | 99.01% |
| Kotak Life Insurance | 98.29% |
| SBI Life Insurance | 97.05% |
| India First Life Insurance | 97.04% |
| Exide Life Insurance | 96.27% |
| Future Generali Life Insurance | 96.08% |
| Star Union Life Insurance | 96.07% |
These figures emphasise that submitting complete and accurate documentation is crucial for a smooth claim settlement.
Factors to Consider Before Filing a Death Claim for Life Insurance Benefits
Before you begin the claim process, it’s crucial to check a few important things:
Was the policy active?
Ensure that the term insurance policy was in force at the time of passing. A lapsed policy (due to missed premiums) will not be eligible for claims.
Who is the nominee?
The insurance payout goes to the nominee mentioned in the policy. If no nominee was assigned, legal heirs will need a succession certificate to claim the benefits.
Cause of death matters:
Some policies have specific exclusions. It’s essential to check if the policy covers the cause of death.Timeframe for filing the claim: Most insurers require claim intimation within 30 days of death. Filing late may complicate things.
Types of Deaths Covered Under Term Insurance
Most term insurance policies cover a wide range of death scenarios, but some exclusions apply. Here’s a breakdown:
Natural Death:
Covered, as long as the policy was active.
Accidental Death:
Covered, but may require additional documents like a police report and post-mortem report.
Death Due to Critical Illness:
Covered if the illness was not pre-existing at the time of purchasing the policy.
- COVID-19 or Pandemic-Related Deaths: Generally covered if the policyholder had no prior exclusions.
- Suicide within the First Year: Most policies do not cover this.
- Death Due to Illegal Activities or Substance Abuse: Usually not covered.
Always check the specific terms of your policy for clarity.
Stepwise Procedure to Claim Life Insurance Benefits
Now, let’s simplify the procedure for claiming insurance into a few easy steps:
Step 1: Notify the Insurance Company
The first step is informing the insurer about the policyholder’s demise. You can do this by:
- Sending an email,
- Calling customer services
- Visiting the insurer’s branch
Provide basic details like the policy number, name of the deceased, date of death, and cause of death.
Step 2: Collect the Required Documents
Different policies may have slightly different requirements, but here are the documents required in most cases:
- Death certificate – Issued by the local municipality
- Original policy document – Proof of insurance
- Duly filled claim form – Provided by the insurer
- Identity proof of the nominee – Aadhar card, passport, etc.
- Bank details of the nominee – Cancelled cheque or NEFT form
- Cause of death proof – If it was an accidental death, additional documents like an FIR and post-mortem report may be needed.
Step 3: Submit the Claim Application
Once you’ve gathered the necessary documents, submit them to the insurance company along with the claim form. Some insurers allow online submissions for faster processing.
Step 4: Claim Verification Process
The insurance company will review and verify the details provided. This may involve checking medical history, verifying policy details, or conducting an investigation (especially if the claim is made within the first three years of the policy).
Step 5: Claim Settlement
Once verified, the insurance company will release the payout to the nominee. This is usually done through a direct bank transfer and can take anywhere from a few days to weeks, depending on the insurer.
Why Do Insurance Claims Get Rejected?
While most claims are honoured, claim rejections remain a serious concern. According to the Insurance Regulatory and Development Authority of India (IRDAI), in FY 2023-24, 11% of term insurance claims were rejected, amounting to a staggering ₹26,000 crore.
For insurance, claims are often rejected due to:
- False Information: If incorrect details were provided during policy purchase (e.g., hiding a pre-existing illness).
- Lapsed Policy: If premiums were not paid and the policy had expired.
- Nominee Issues: If the nominee is not properly documented or there’s a legal dispute.
- Cause of Death Exclusions: If the death was due to reasons not covered under the policy (e.g., suicide within the first year, drug overdose).
To avoid claim rejection, ensure the policy is kept active, all information is accurate, and claims are filed on time. Seeking the help of a wealth advisor can further simplify the process.
Final Thoughts: Why a Wealth Advisor Can Make a Difference
Handling financial matters after the loss of a loved one can be emotionally exhausting. Dealing with paperwork, verifying documents, and following up with the insurer can feel like too much to handle.
That’s where a wealth advisor can step in. They not only ensure that all necessary documents are in place but also help navigate the complex insurance process smoothly.
If you’re feeling overwhelmed, consider seeking the guidance of a financial expert—it’s always a wise decision to have someone by your side during such crucial moments.
Need help with insurance claims or financial planning? Get in touch with a trusted wealth manager from Fintoo today.
FAQS
1. Can the nominee be changed after the policy has started?
Yes, you can change the nominee of your term insurance policy at any time during the policy term. To do so, simply fill out a nominee change form and submit it to your insurance company. Be sure to keep a copy for your records.
2. Are there tax benefits for the premium amount paid for a Term Insurance Plan?
Yes, the policyholder can avail tax exemption of up to ₹1.5 lakh on the premium paid, subject to the terms and conditions outlined by the tax authorities.
3. Can I get my money back if I survive the Term Insurance Plan?
If you have opted for a Return of Premium (ROP) rider, you will be eligible to receive the premiums paid if you outlive the policy term.
4. Is there a waiting period for Term Insurance Policies?
Yes, most term insurance policies have a waiting period, typically ranging from a few months to a couple of years. During this time, certain causes of death (like suicide or certain natural causes) may not be covered.
5. Can I take a loan on the Term Insurance Plan I opted for?
No, you generally cannot take a loan against a term insurance plan. Unlike whole-life or endowment policies, term insurance plans do not accumulate cash or savings value over time and, therefore, cannot be used as collateral for a loan.
Disclaimer: The views shared in blogs are based on personal opinions and do not endorse the company’s views. Investment is a subject matter of solicitation and one should consult a Financial Adviser before making any investment using the app. Investing using the app is the sole decision of the investor and the company or any of its communications cannot be held responsible for it.
