Term Insurance Claim Settlement

Term insurance claim settlement is a process where a beneficiary registers a claim to the insurance company in order to avail death benefits available in case of unfortunate death of the life assured or maturity benefits in case of survival of the life assured till the end of the policy term.

Claim Settlement Ratio of Term Insurance Companies in India

Here is the list of claim settlement ratio of the best term insurance companies in India:

Term Insurance Company

Claim Settlement Ratio 2019-20

No. of Claims Paid 2019-20

Max Life Insurance

99.22%

15342

HDFC Life Insurance

99.07%

12509

Tata AIA Life Insurance

99.06%

2954

Dhfl Pramerica Life Insurance

98.42%

560

Exide Life Insurance

98.15%

3404

Reliance Life Insurance

98.14%

7866

Canara Hsbc Life Insurance

98.12%

1252

Bajaj Allianz Life Insurance

98.02%

11887

Aegon Life Insurance

98.01%

344

ICICI Prudential Life Insurance

97.84%

11212

Aditya Birla Sun Life Insurance

97.54%

5035

Aviva India Life Insurance

97.53%

790

Bharti Axa Life Insurance

97.35%

1285

PNB MetLife Insurance

97.18%

4241

Daiichi Life Insurance

96.96%

1210

Life Insurance Corporation India (LIC)

96.69%

733809

Indiafirst Life Insurance

96.65%

2166

IDBI Federal Life Insurance

96.47%

1366

Kotak Life Insurance

96.38%

3225

Future Generali Life Insurance

95.28%

1089

SBI Life Insurance

94.52%

21257

Shriram Life Insurance

91.61%

2816

Sahara India Life Insurance

89.54%

585

Edelweiss Tokio Life Insurance

83.44%

272

(Source: IRDAI Annual Report - Claim Settlement Ratio for the year 2019-20)

Types of Term Insurance Claims

Term Insurance provides a life cover to policyholders in case of their nature as well as unnatural death. Given below are different types of the term insurance claims:

1. Maturity Claim: A maturity claim is a type of claim that is paid at the time of the maturity period of the term insurance plan. Under this segment of claim, a certain amount is paid to the policyholder, if he or she services till the completion of the policy. The maturity claim is paid only on timely payment of premiums. To receive this claim, policyholders are required to fill and submit a duly signed discharge form. Also, this maturity claim amount is tax-free as per the Income Tax Act.

2. Death Claim: A death claim is a type of claim where the claimant raises the request for death benefits in the case of the policyholder’s demise. In such situations, the sum assured amount specified in the policy is paid to the nominee upon the death of the policyholder. To get the claim amount, the insurance company needs to be conveyed about the death of the policyholder which may include term insurance policy number, date of death, reason of death, and the policy tenure till when the insurer is liable to compensate. The death claim amount is also tax-free as per Section 10(10D) of the Income Tax Act.

3. Rider Claim: Riders are optional benefits that policyholders can opt for at the time of buying a term insurance policy by paying an additional premium cost. With the rider claim, policyholders become eligible to receive compensation for situations other than maturity or death. Some popular term insurance riders are Critical Illness Rider, Accidental Total or Permanent Disability Rider, and Waiver of Premium Rider. The nominee can raise a claim for any of these riders that are bought by the policyholder on his or her behalf.

Documents Required for Term Insurance Claims

To get the term insurance claim amount, some documents are required to be submitted. Here is the list of some documents that are required for term insurance claims:

  • Claimant’s photo ID proof
  • Claimant’s address proof
  • Original policy documents
  • Claim forms (duly signed and attested)
  • Death certificate attested by the local authorities
  • Copy of FIR or post mortem reports or punchnama
  • Medical Records (including hospital discharge summary)
  • Copy of canceled cheque/bank statement or bank passbook.

Claim Settlement Process of Term Insurance Policy

In order to get your term insurance policy claim settled, you should follow the below-mentioned process:

Step 1: Claim Intimation: The nominee is needed to convey the insurance company for the claim either online or offline at the earliest. The claim intimation must be supported with policyholder details like policy number, policyholder’s name, reason of death, place of death and nominee details. The claimant can either directly visit the insurance company for claim intimation or download the claim forms online from the website.

Step 2: Submission of Documents: The nominee is required to produce all the required and relevant documents to initiate the claim settlement. The insurance company will examine the documents submitted by the claimant and may even ask for additional documents if required. It is mandatory to submit the right documents, otherwise, it may lead to the rejection of a claim request. As documents play a vital role in the claim settlement process, the claimants are advised to go through the terms and conditions to get the information about the required documents for the claim.

Step 3: Claim Settlement: Once the nominee has submitted the documents to the insurance company, the insurer has to settle the claim within 30 days, according to the regulation of the Insurance Regulatory and Development Authority of India (IRDAI). If the investigation of documents and other details requires more time, even then, the insurance company should complete the process within 6 months from the date of getting the intimation of the claim.

Common Reason for Rejection of Term Insurance Claims

Although the process to raise a claim for term insurance plans is quite simple, still, it can be rejected due to some common reasons which are given below:

1. If a policyholder has provided wrong, inaccurate, or false detail or information in the application form of the term insurance policy.

2. If the premiums are not paid by the policyholder on time or the policy is not renewed within the grace period.

3. Reason of death is excluded in the term insurance policy which may be suicide before the first policy term completion, accidental death caused under the influence of alcohol or drugs, or any related substance.

4. A fraudulent claim made by the nominee of the policyholder to gain the claim amount.

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FAQ About Term Insurance Claim Settlement

  • When can term insurance claims be made?

    The term insurance claim is made with an insurance company to get death benefits in case of the death of the policyholder or to receive the maturity benefit in a situation where the policyholder sustains till the end of the policy term.

  • What are the top term insurance companies?

    The best term insurance companies are generally listed on the basis of their claim settlement ratio as it depicts the capacity of insurance companies to settle the claim. The top term insurance companies on the basis of claim settlement ratio for the year 2019-20 are Max Life Insurance with 99.22%, HDFC Life Insurance with 99.07%, and Tata AIA Life Insurance with 99.06%.

  • What are the documents required to make a term insurance claim?

    In order to get the claim amount for term insurance, you need to submit the documents listed below:

    • Nominee’s photo ID proof
    • Nominee’s address proof
    • Original policy documents
    • Signed and attested claim forms 
    • Attested death certificate by the authorities
    • FIR copy and post mortem reports copy (If required)
    • Medical Records (with hospital discharge report)
    • Cancelled cheque or bank statement or passbook copy.
  • In how much time the term insurance claim is settled?

    As per the guidelines of the IRDAI, the insurance companies have to settle the claim within 30 days of receiving the required documents. Even if the insurance company requires more time to investigate the documents presented, then insurers will have to complete the process within 6 months from the claim intimation date.

  • Can my term insurance claim be rejected?

    Yes, your term insurance claim can be rejected by the insurance company in the following situations:

    • If you have provided false or inaccurate details to the insurer
    • If you have not made the payment of term insurance premium on time 
    • If you try to make a fraudulent claim in order to gain the amount of claim.
    • If you raise a claim for the death that occurred due to a reason excluded in the policy.

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