Reasons for Life Insurance Claim Rejection
Updated On Apr 23, 2021
Table of Contents
- Reasons for Claim Rejection
- 1. Incorrect Application Form
- 2. Non-Disclosure of Medical History
- 3. Policy Lapse Due to Non-Payment of Premium
- 4. Lapsed Policy Due to Non-Renewal
- 5. Not Declaring Existing Policies
- 6. Not Updating Nominee Information
- 7. Claims Against Exclusions
- 8. Fraudulent Insurance Claim
- 9. Delay in Reporting the Accident
Having claims honored by insurance providers is an uphill battle, more often than not. In today's insurance plans, there are so many provisions, limitations, and exceptions that policy buyers must be aware of to ensure smooth processing of claims Failure to satisfy all of these requirements would result in no insurance payout being paid out by the insurance company, and you or your nominee/beneficiary would have to suffer due to this
Reasons for Claim Rejection
Some of the common reasons for rejection of claims are -
1. Incorrect Application Form
You must accurately and carefully fill in particulars such as age, income, profession, qualifications, lifestyle (smoking/drinking), information on past policies and statements, if any, and other information that is needed in the application form. Incorrect/missing information can also correspond to fraud and result in the termination of policy benefits.
2. Non-Disclosure of Medical History
It is mandatory to report past and current medical conditions, treatments, surgeries, etc., so it affects the insurance premium. Many online insurance rate calculators often need you to disclose lifestyle decisions such as smoking when estimating the premiums. To prevent denial of life insurance claims, health records of family members, especially conditions such as cancer, heart ailments, blood pressure, or all other inherited conditions, must be shared.
3. Policy Lapse Due to Non-Payment of Premium
Claims are settled with active insurance plans only. The policy lapses following the grace period (maximum of 30 days in annual premium policies) if you have missed paying the premium. All previously paid premiums do not qualify for it in such situations.
4. Lapsed Policy Due to Non-Renewal
Insurance companies do not honour any claim if it is made against an incident that occurred after the policy tenure has expired. It is imperative to renew the insurance policy every year before it expires.
5. Not Declaring Existing Policies
When purchasing a new insurance plan, you must report all your existing insurance plans. Often, individuals do not mention these details because they find it difficult to sift through old documents to get the particular details. One of the reasons why insurance claims may be denied is concealing those evidence.
6. Not Updating Nominee Information
The benefits shall be paid to the nominee/beneficiary on the death of the insured/policyholder. Thus, it is essential to keep the insurance provider aware of the nominee's particulars. Failure to do so creates problems during the claim process which can lead to a denial of the life insurance claim.
7. Claims Against Exclusions
Exclusions are conditions, mentioned in the policy document, which the insurance company does not cover. Therefore, if a claim is raised for a condition mentioned in the ‘exclusion’ part of the policy, it will be rejected.
8. Fraudulent Insurance Claim
Making fraudulent or exaggerated claims will lead to the rejection of the claim. Moreover, it could also result in legal consequences along with paying an additional amount towards the investigation of the fraud.
9. Delay in Reporting the Accident
Claims must be reported to the insurance company immediately. However, if the claimant takes a very long time to make the claim, and does not provide the insurance company with the necessary documents within the specified time-frame, the claim can get rejected.
An insurance policy helps to redeem the financial losses incurred when the insured meets with any unforeseen incident or an unfortunate event take place. Hence, it is wise of you to not make mistakes while filing a claim that can result in the claim being rejected. To prevent such a situation, you must be aware of the reasons for the rejection of a claim. By being aware of the reasons, you can avoid making mistakes and ensure that your claim is settled smoothly.
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