Make Claim Settlement Easy For Your Loved Ones

Life Insurance is a selfless act, and its primary objective is to ensure the financial wellbeing of your loved ones in the event of your unfortunate demise. The last thing you’d want for your dependents at such a tumultuous time, is for them to be running from pillar to post in a scramble to acquire the settlement moneys due from your policy. Even worse; imagine the decimating blow that a claim declination could strike upon them. It’s worth noting that (depending upon the insurer), somewhere between 2 and 5 per cent of death claims get rejected each year. The percentage of claims that get paid, but after significant strife and follow up, is significantly higher.

In India, Life Insurance is often purchased frivolously, as a savings instrument and without due consideration of the actual problem it’s meant to solve. You need to take certain steps to ensure that your policy serves its real purpose, in the unfortunate event of your death. Here are a few steps to take.

Don’t falsify details
In an attempt to ‘fool the underwriter’, many applicants mention incorrect details in their proposal forms. Falsifying details about your age, income, medical history, or family medical history can result in a claim declination later. Typically, over half of all repudiated claims occur because of non-disclosure of an existing health condition, such as heart disease, liver disease or diabetes.

HDFC Life offered reasons behind it’s repudiated claims on their website recently here. This disclosure holds some clued about the kinds of hidden facts that could lead to a rejected claim later on. “45% were repudiated due to non-disclosure of existing health conditions, 19% were repudiated due to misrepresentation of age, 17% were repudiated due to income misrepresentation, 9% were repudiated due to non- disclosure of insurance with other insurance companies prior to our policy, 6% due to misrepresentation of occupation and 4% due to other misrepresentation”, the document states.

By hiding facts to get a policy issued, applicants are missing the point entirely; why get a policy issued at all, if there’s a chance that it’ll be useless at the time when it’s needed the most?

Fill out the forms yourself
Whatever you do, do not leave the form filling to your life insurance agent. Your agent is in a hurry to get the policy issued at all costs, as his commission becomes due only upon policy issuance. This creates a direct conflict of interest (one of the several in the life insurance industry, unfortunately) between you and your agent. Your agent could fill out the forms with inaccurate or half-baked details in an effort to avoid medical examinations or increased premium quotes. In the long run, this could cost your family dearly in their hour of need. Always fill out every form yourself and insist on copies.

Stay organised
Keep your life insurance policy documents neatly organized in a separate folder. In case there are any changes in your correspondence details, inform your insurer promptly. Build complete awareness of your policy and its various clauses. For instance, some policies may require you to inform the insurer in case you take up a different line of work or develop a medical condition. Not doing so could be construed as a breach of contract and render the policy null and void. When it comes to your life insurance policies, its vital to stay on top of affairs.

Keep your dependent informed
Purchasing a policy is a moot point if your dependents aren’t even aware of the policy. This may sound like a no-brainer, but you need to sit down with your dependent beneficiary and discuss the details of all your policies with him or her. Make sure you clarify the settlement process, whom to contact in case of an eventuality, and other seemingly trivial operational issues related to your policy.

Don’t scrimp when it comes to premiums
Often, Life Insurers will charge different premiums for the same coverage amount. You may be tempted to jump in and purchase the cheapest policy. However, this may prove unwise in the long run. The additional premium may be the price you’re paying for a higher probability of your death claim being honored. Look through IRDAI’s claim settlement ratio data for the past three years and put the premium differentials into perspective before you sign above the dotted line.