Reasons for Why Would a Life Insurance Claim Be Rejected
Published On Nov 17, 2021 10:00 AM By InsuranceDekho
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Buying a life insurance plan is one of the most efficient ways of ensuring one’s family’s financial well-being in case they are not around them tomorrow to protect them physically. However, the anticipated benefits of a life insurance plan can go in vain if the claim made by the nominee gets rejected. Now, many of you would ask why would a life insurance claim be rejected by an insurance company?
Well, there can be a number of reasons which can lead to a rejection of a life insurance claim. Thus, it is wise to know them in advance so that the dependents do not face any financial problems in an unfortunate time of emotional grief.
Why Would a Life Insurance Claim be Rejected?
Below, we list down the common reasons which may result in a life insurance claim rejection -
1. Misrepresentation or Non-Disclosure of Facts
The contract of insurance is based on trust. The insurance company calculates the amount of premium payable by a life assured based on the details shared by them, assuming them to be true.
If at the time of a claim settlement, the insurance provider finds out that the policyholder had misrepresented or concealed facts, then the life insurance claim is bound to get rejected. Thus, one must share all the correct information about them like their pre-existing medical conditions, income, age, profession, etc., at the time of purchasing a life insurance plan.
2. Delay or Non-Payment of Premium
Another common reason which often leads to rejection of life insurance claims is non-payment or delay in the payment of premiums which cause a policy lapse. It is important to remember, that only those claims are honoured by insurance companies which are made against an active policy. And thus, if your policy has lapsed because of non-receipt of premiums by the insurance company, then the life insurance claim will be rejected.
3. Claims Made During Waiting Period
Almost all life insurance plans come with an initial waiting period during which no benefits are payable under the plan. It generally lasts for 30 days, but may vary from plan to plan. No life insurance claim made during the initial waiting period is admissible by the insurance provider and is thus liable to get rejected.
4. Death Type Exclusions
There are certain causes of deaths which are not eligible for claiming the death benefit under a life insurance plan. Following are the causes of deaths which are generally not covered under a life insurance plan -
- Suicide or attempted suicide
- Self-inflicted injuries
- Injuries due to racing, underwater activities, martial arts, hunting, mountaineering, parachuting, bungee jumping, etc.
- Injuries due to breach of law, influence of drugs, liquor etc.
- Adventurous activities
- Aviation activities or aeronautics unless the life assured is a passenger on a licenced and scheduled commercial aircraft
- Pre-existing diseases or infection
- Terrorism activity, war, or natural calamity
- Military duty
- Nuclear contamination
5. Incomplete or Not Up-to-date Nominee Details
Nominee is the individual who is entitled to receive the benefits of a life insurance policy in the event of an unfortunate demise of the life assured. Failure to complete or update the nominee details can cause a life insurance claim rejection. One of the common instances is where individuals buy a life insurance plan at a young age and mention their parents as the nominee.
Now, if at the time of a claim settlement, the parents of the life assured are no more physically present, the claim gets rejected. Thus, it is important to keep your nominee details complete as well as updated so that your loved ones do not face any hassles at the time of filing a claim.
6. Failure to Complete Medical Tests
There are certain life insurance plans which compulsorily require the life assured to undertake some required medical tests. If you refuse to take the medical tests, or fail to undertake them, then there are relatively high chances that the insurance provider will reject the claim on account of pre-existing diseases. Thus, you must undergo the mandatory medical tests at the time of policy purchase to avoid such risks.
Also read - What Is Life Insurance And How To Buy It?
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.