Your family’s is of paramount importance to you. You have been diligently investing to take care of your family needs now and in the future. Term insurance is the simplest and cheapest way to safeguard your family’s financial stability from unexpected death of the breadwinner. However, rejection of the claim can lead to disastrous consequences for your family. While frivolous rejection can be overturned, you should make sure you don’t commit any mistake that may result in a valid and justified rejection. Read ahead for an overview of six mistakes that can result in valid rejection of the term insurance claim made by your nominees.
Mistakes That Can Lead to Rejection of Your Term Insurance Claims
1. Casual and Short-Sighted Approach
Buying term insurance plans is an important financial decision. Hence, don’t have a casual and shortsighted approach, and don’t rely on biased and unprofessional advice provided by friends, relatives, and insurance agents. Cutting corners to reduce immediate premium outflow can result in disastrous consequences in the future.
2. Providing Incorrect Details
Providing incorrect details in your term life insurance policy application will always result in the rejection of your claims. Never make the mistake of thinking that you can cheat or fool the insurance company. Your family may have to pay a very heavy price for your flawed decision of providing false information to the company.
3. Concealing Important Information
Insurance is a good faith transaction where all parties are bound to provide with full and comprehensive information. Concealing that you work in a high-risk job or not disclosing information about your medical history may result in complications in the future. You cannot justify concealment of important information by placing the blame on the insurance company.
4. Avoiding Medical Tests
Avoiding medical tests will not help you hide your medical issues. The insurance company may investigate your death before approving the claim. If proved that you concealed important information at the time of purchasing the policy, then the claim may get rejected. The best option is to conduct all medical tests upfront to avoid complications when filing the claim.
5. Letting Your Policy Lapse
Letting your policy lapse may not seem like a big deal. However, this is the most common reason why claims are rejected. Insurance companies allow you retrospective restoration of lapsed policies. Take advantage of this facility to reinstate your policy. Automatic rejection will take place if the policy has lapsed due to nonpayment of premium.
6. Not disclosing old Insurance policies
Most insurance companies require details of other insurance policies held by the individual. Concealing this information merely because you find it unimportant is not a wise move. Nondisclosure or incorrect disclosure may result in the rejection of your claim.
Tips to Avoid Rejection of Term Insurance Claim
- Never allow your agent to identify the best term insurance policy for you. Analyze your financial capabilities, consider your short-term and long-term liabilities, and choose a plan that you can purchase without concealing or distorting information.
- Pay premiums on time. Opt for a plan that allows online term plan premium payments. Don’t let your policy lapse due to nonpayment of premium.
- Update your insurance company with changes in your medical condition or job profile. It is better to be safe than sorry as far as your term insurance policies are concerned. Carry out a hypothetical analysis of the potential impact of rejection of the insurance claim on your family. You should always take steps to ensure your term insurance claims don’t get rejected.
Our article Checklist for buying Life Insurance Policy explains 10 important things that one should do before buying signing the proposal form and other what questions to ask one self before buying a life-insurance policy, understanding the policy, terms and conditions.
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What would happen if your claim for term insurance gets rejected?Your family would have to face stress on claiming the Insurance in addition to grief of losing you. It could bring your family’s world upside down. You certainly don’t want your loved ones to go through such adversities at an already adverse time, so you must try to prevent this horrific scenario from arising. Please understand the reasons for the rejection of a claim.You must be very honest and transparent while signing up for term insurance. It’s better to be safe than sorry. Don’t let your efforts and money go to waste.
