Top Reasons for Life Insurance Claim Rejection

23 February 2024
4 min read
Top Reasons for Life Insurance Claim Rejection
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Getting a life insurance policy for yourself and your loved ones is the best investment. It secures you from unanticipated incidents and expenses that may follow.

Insurance claims are often perfectly settled. But, at times, they may be rejected too. Be it on the grounds of false information, misleading data, or any other objection, an insurance company can reject life insurance claims as per the norms.

An insured should be cautious enough to submit mistake-free claims. For your assistance, here we have highlighted various life insurance claim rejection reasons that one must be aware of to avoid errors.

Top 5 Reasons for Life Insurance Claim Rejection

Here is a list and overview of some of the most common reasons for life insurance claim rejections-

S.No.

Reasons Why Life Insurance Claim May Be Rejected

1.

False Information/Non-Disclosure of Details

2.

Lapse in Payment of Premiums

3.

No Update About Nominee Details

4.

Failure to Take Medical Tests

5.

Delay in Filing Claim

Now, let us discuss these reasons one by one in detail-

1) False Information/Non-Disclosure of Details

This is one of the commonly cited reasons for life insurance claim rejections. An insurance company may reject your claim if you provide incorrect information or do not disclose crucial ones.

People often provide false information, including their age, profession, income, etc, but this shouldn't be done as these are crucial factors determining your policy’s premium and coverage.

Hence, you should prudently provide correct information and even cross-verify the details filled in by the insurance company to avoid any concerns in future.

2) Lapse in Payment of Premiums

Failure to pay your life insurance premium is yet another reason for claim rejection. If you fail to pay your insurance premium, you won’t be able to benefit from the policy’s coverage. The insurer will directly reject your claim, quoting the same reason.

Insurance companies often notify through messages, alerts, emails, etc., to remind about the payment. Hence, you should certainly adhere to making payments on time to make the most of the coverage in times of crisis.

3) No Update About Nominee Details

As per the government guidelines, you are required to add/update Nominee details in your insurance policy. This is essential as the naming of the nominee clarifies who will attain the policy benefits if, unfortunately policyholder is not there any more.

If you fail to add or update the nominee details, your insurance company will transfer the amount to your heir. Note that if the heir is not decided, the claimant would have to run through a chain of steps to prove his relationship with the policyholder. This can be a cumbersome process, which may lead to claim rejection.

Hence, it is better to add and update your nominee details properly.

4) Failure to Take Medical Tests

Insurance companies often conduct medical tests to verify the medical information provided by an applicant. This is especially done in high-risk coverage. You should definitely go through all the tests as you can find out any pre-existing illnesses, and the company can provide coverage for it if required in future.

In case you deny taking the tests, there’s a high chance your claim might get rejected, as the insurer may quote that you had a pre-existing illness.

5) Delay in Filing Claim

Most people file insurance claims within time, but in some instances, there might be a delay.

IRDA has asked the companies not to reject the claims on delay grounds, but you should always claim duly. This is because the insurer would want to properly investigate the cause/accident/death. A delayed claim from your end may lead to a delayed payment from the insurer’s end as well. Hence, to avoid disarray, ensure to file promptly.

Conclusion

Confronting life insurance claim rejections can be burdensome. To avoid the same, you should be prudent while filing claims, disclose accurate information, pay the necessary premium on time, understand the exclusions, and review your policy thoroughly.

All such measures can ensure seamless claim settlement without causing a hole in your pocket.

You May Also Be Interested to Know

1.

Best Life Insurance Policy in India

2.

Difference Between Life Insurance and Health Insurance

3.

How to Avail Loan Against Life Insurance Policy

4.

Difference Between Term Insurance and Life Insurance

5.

Important Things About Insurance Plans You Have to Know
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