Most Common Reasons for Rejection of Life Insurance Claims

Published On Jun 11, 2021 2:00 PM By Shrida Gulati

Life insurance providers are constantly working hard to step up the life insurance company’s claim settlement process because it is very understandable when a family loses their sole breadwinner. The claim amount or the death benefit can be very useful for the family member to maintain their lifestyle even in absence of their loved one. Insurance providers have simplified the claim settlement process, it is very easy to apply for a claim nowadays.

In some cases insurance companies can reject the claims. No matter how quick and hassle-free claim settlement is offered by the insurance provider, claim rejection cases can come up.

What are some of the most common reasons for rejection of life insurance claims?

Sometimes the claim rejection can take place because of the errors made by the insurance company’s but most of the time claim rejection happens because of carelessness of the policyholder. Following are some of  the most common reasons for life insurance claim rejections:

1. Incorrect Disclosure of Facts in the Application Form

Incorrect information provided by the policyholder can be unfavourable in case of the claim settlement process. You should carefully mention details such as age, income, occupation, medical history, and previous life insurance policy or any claims taken. If you consume alcohol or tobacco you should clearly mention it in the application form. Basically correctly filling the application form is a must. When you mention such details it helps the underwriters to evaluate the risk and decide the premium for your life insurance policy. Incorrect or incomplete information can also be considered fraud and lead to termination of the policy.

2. Not Disclosing Medical History

If you have any existing medical condition or you’ve had any previous medical conditions, surgeries etc. it is mandatory for you to disclose it to the insurance company because this will be a major factor which determines the premium of your life insurance policy. When you calculate premiums online it is to disclose your smoking or drinking habits. If any hereditary medical conditions are flowing through the family like blood pressure, diabetiese etc should also be mentioned. If you fail to mention all of the above then you may not be able to avoid claim rejection.

3. Not Filling the Proposal Form Personally  

Sometimes an agent or an advisor may ask you to hand them a signed blank check and may ask to fill the proposal form on your behalf. The agent or the advisor can be very close but he does not know everything about your health, finances or hereditary medical history. You should be responsible for filling your own life insurance proposal form. This will not only eliminate the chances of claim rejection but you can also make sure you choose the best features that you think suits your family needs.

4. Not Providing Information of the Nominee

If the policyholder/insured passes away the benefits payable are paid out to the nominee or beneficiary mentioned in the life insurance policy by the policyholder/insured. It is very mandatory to mention the nominee and nominee details like nominee’s address, contact information etc. If you fail to mention the nominee, it may cause problems during the claim settlement process, and the insurance may reject the life insurance claim. It is advised to choose your nominee very carefully.

5. Lapse of Policy

Insurance Companies settle claims for only active life insurance policies. If you have failed to pay premiums regularly for your life insurance policy, the policy will lapse after the given grace period. Usually the grace period offered is 15 days for monthly premium payment and 30 days for quarterly, half-yearly and yearly premium payment. If you fail to pay the premium within the grace period the policy lapses. In this case all the premiums paid previously are not considered. It is advised to set up direct debit. 
If you still keep forgetting about regular premium payment it is then advised to revive the to keep the policy in force.

Conclusion

When you purchase a new life insurance policy it is very important to make sure that all the details and information you fill in the proposal form are appropriate and attested by you. Make sure you fill the form on your own and mention your personal habits. If you follow the above discussed things you can avoid the life insurance claim rejection, you wouldn’t want to waste your money in any way. Be precise about your information and if you already have an insurance policy you should also mention it in the proposal form.

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Disclaimer: This article is issued in the general public interest and meant for general information purposes only. Readers are advised not to rely on the contents of the article as conclusive in nature and should research further or consult an expert in this regard.