Term insurance is a security cover that works to provide financial support to your family in your absence. It is taken with the expectation that if the family needs support in case of any untoward incident, the insurance company will pay the claim. But what if that claim gets rejected?
There are many cases where, despite having term insurance, the claim is rejected by the insurance company. The reason? Some common but serious mistakes, which often happen while applying or during the policy. Let us know the 5 common reasons due to which the term insurance claim can be rejected.
1. Hiding or giving wrong medical information
This is the biggest and common reason for claim rejection. Many people hide their health related information such as diabetes, blood pressure, heart disease, smoking or drinking habits while buying a policy. If the cause of death is later found to be related to these diseases, and the insurance company feels that the information was hidden, then they can reject the claim.
2. Policy lapse due to non-payment of premium
If you do not pay the premium on time, then your policy lapses. In such a situation, if something untoward happens, the insurance company does not accept the claim. Despite being a technical reason, this is a serious negligence, which can be avoided.
3. Not providing or updating nominee information
Many people do not fill the nominee information at the time of taking the policy or do not update it later despite the family’s situation changing. In such a situation, when the claim is filed, there may be legal hurdles and the claim may be stopped. It is very important to provide the correct nominee information and update it from time to time.
4. Providing incorrect or incomplete personal information
While buying a policy, information related to your age, income, profession and family is asked. Many times people fill in wrong information intentionally or by mistake. This small mistake can become a big problem in the future and the insurance company can reject the claim on this basis.
5. Not informing insurer within stipulated time about policyholder’s death
The insurance company may deny the claim in case of a delay in the intimation of the death of the policyholder. There is a stipulated timeline within which the nominee has to file a claim.
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