What are various “types of claims in Life Insurance”? What are the documents required for claim settlement? What to do if your claim is rejected?
The main purpose of buying a Life Insurance Policy is to ensure protection to our near and dear ones in case of any unfortunate event. Before buying a Policy, we should know the basic rules and procedures for Claim Settlement in various types of claims in Life Insurance.
What are the various types of claims in Life Insurance?
The most common claim in Life Insurance is the Maturity Claim.
Maturity Claim in Life Insurance
This is the final settlement of the amount in an Insurance Policy as per the policy conditions on the maturity date of a Policy. In an Endowment Policy, this claim consists of 3 components:
- Sum Assured
- Final additional bonus, if any
So, the policy holder will get the total of the above 3 on the maturity date and the contract ends.
Documents required for Maturity Claim
Insurance Company will send you a Discharge Form in advance, so that you can get the maturity amount on the due date. You have to return the Discharge Form duly filled along with the original Policy Bond to facilitate the claim payment. Normally, Insurance Companies will send you post dated cheque, so that you can encash the cheque on the maturity date. Some companies are offering NEFT facility and credit the claim amount to your bank account on receipt of the Discharge Form.
Survival Benefit Claims in a Money Back Policy
This is a routine payment in the case of Money Back Policies. As per the Policy conditions, you will be eligible to get a fixed percentage of the sum assured on different dates. In a most common 20-year Money Back Policy of LIC, you will get 20% of the sum assured after 5th year, 10th year, and 15th year. At the end of 20th year, you will get the balance of 40% and the bonus for the full term along with final additional bonus, if any.
Documents required for Survival Benefit Claims
The Insurance Company will send you the Discharge Form in advance to facilitate these payments. You have to return the Discharge Form duly filled along with Policy Bond for endorsement. On receipt of these documents, the Insurance Company will settle the amount and return the Policy Bond with endorsement. Normally, you will get a post dated cheque in advance.
Now, most of the companies are not insisting on Discharge Forms up to a certain amount and settle the amount on the due date through NEFT. Companies are liberal in these claims, because these are routine claims as per the Policy contract.
Death Claim in Life Insurance
Death Claims Settlement is the most sensitive area in a Life Insurance business. In case of a claim, the nominee/assignee in the Policy is expected to intimate death to the Life Insurance Company. On receipt of the death intimation, the Insurance Company will issue a set of claim forms to the claimant. The documents to be submitted will vary depending on the duration of the Policy. If the death is reported within 3 years from the start of the Policy, documentation will be high.
The important Claim Forms are:
- Claimant’s statement giving details of the deceased and the claimant.
- Medical Attendant’s Certificate to be completed by the doctor of the deceased during the last illness.
- Certificate from the hospital, if the deceased was treated in a hospital.
- Certificate from the Family Doctor.
- Certificate of Identity, Burial or Cremation.
- Certificate from the Employer, if the deceased person was employed.
- Certified copies of First Information Report, Post Mortem Report, Police Investigation Report, if death is due to accident or unnatural cause.
The Claimant has to submit the filled-in Claim Forms along with the original Policy document and the Copy of the Death Certificate to the Insurance Company. Evidence of Title to the deceased’s estate is to be submitted, if there is no nomination or assignment in the Policy.
On receipt of all the forms, the Insurance Company will decide regarding the claim. If there is a misrepresentation of material facts at the time of taking the Policy, the Insurance Company can reject the claim. But Section 45 of the Insurance Act gives some relief to policy holders in such cases.
But normally, Insurance Companies settle all genuine claims.
Claim Rejection – what to do next?
If there is rejection of a genuine claim by an Insurance Company, the claimant can go for appeal, they can approach the Claim Review Committee of the Insurance Company. If the complaint is not attended properly, the claimant can approach IRDA, the insurance regulator. Still, if the issue is not solved, the claimant can approach the Insurance Ombudsman appointed by the government to look into such complaints. Normally, the issues will get resolved at any of these levels.
If the issue is still not solved, the claimant can approach Consumer Forum or Civil Courts.
Settlement of various types of claims in life insurance calls for different procedures. An understanding of the types of claims and procedures will help the claimant in times of need.