Term Insurance Claim Process: A Step-by-step Guide

There Are Three Primary Types of Claim Settlements:

Maturity Claims: Maturity Claim refers to the benefit received when the policy reaches its maturity or completion of the specified tenure.

Death Claims: In the unfortunate event of the policyholder's death, while the policy is still active, the beneficiaries are entitled to receive a death claim. This financially supports the policyholder's loved ones during such a difficult time.

Rider Claims: Term Insurance features can often be enhanced with additional riders, such as accidental death or critical illness coverage. If the policyholder has opted for these riders, the beneficiaries may be eligible for an additional payout beyond the basic sum assured, subject to the specific conditions mentioned in the policy.

What Are the Types of Deaths Covered under a Term Plan?

Not all types of deaths are eligible for claims under a Term Insurance Plan. The following is a general list of deaths that may or may not be covered, but the specific terms and conditions of the policy will determine the exact coverage.

Deaths Covered under Term Plans:

• Natural death/medical condition

• Accidental death

• Deaths resulting from pre-existing diseases declared at the time of purchasing the policy

• Deaths caused by critical illnesses

• Health-related deaths

• Deaths due to COVID-19

• Death by suicide (subject to policy conditions)

Deaths Not Covered under Term Plans:

• Deaths resulting from engaging in illegal activities

• Deaths caused by pre-existing diseases not declared at the time of purchasing the policy

• Deaths due to driving under the influence of alcohol/drugs

• Self-inflicted injuries

• Death by suicide (within the initial policy period, subject to policy conditions)

• Deaths resulting from participating in hazardous activities

• Deaths resulting from participating in adventurous sports (if not disclosed during policy purchase or without a relevant add-on)

• Deaths due to childbirth or pregnancy complications

• Deaths resulting from sexually transmitted diseases (e.g., HIV)

• Deaths due to intoxication

• Deaths resulting from natural disasters

Please note that the actual coverage may vary depending on the specific terms and conditions of the policy.

What is the claim settlement process for a death claim in term insurance?

Step 1: Notify the Insurance Company about the Claim:

The first step you should take is to inform the insurer about the demise of the policyholder. The beneficiary or nominee is required to submit a claim settlement form, along with essential documents such as a death certificate. Take note that the insurance company must be notified within a period of three months or 90 days from the policyholder's date of death. You have the option to either visit the insurance branch in person to submit the claim form or fill it out online and submit it for claim settlement. When completing the term insurance claim settlement form, you need to provide details such as the policyholder's name, policy number, date of birth, date of death, cause of death, and place of death.

Step 2: Assessment of Claim by the Insurance Company:

Once the claim settlement form has been filed, the insurer will assess the claim. The documents are scrutinised, and additional details, if any, are sought. The insurance company can send a requirement letter to the beneficiary if more details are required. If the insurer has any suspicion, they will investigate your term insurance claim.

Step 3: Claim Settlement:

Based on the assessment, the insurance company will now either approve or reject the term insurance claim. In the case of approval, the insurer will transfer the sum assured to the nominee's bank account. Conversely, a letter of rejection will be provided in the case of claim rejection, enumerating the reasons for rejection. The Insurance Regulatory and Development Authority of India (IRDAI) mandates insurers to complete the claim settlement within 30 days. As per IRDAI rules, in the case of a claim requiring further investigation, the claim has to be settled within six months.

Typically, insurance companies conduct further investigation if a claim is made within three years of availing of the term insurance policy. In order to verify the authenticity of the claim, the insurance company has the option to corroborate the information with pertinent authorities such as medical professionals and accident investigators.

What Are the Documents Required for a Death Claim in a Term Plan?

To initiate a death claim, the following documents are typically required:

1. Duly-filled claim intimation form

2. Death certificate

3. Original policy documents and forms related to the term plan

4. Beneficiary's identity proof

5. Policyholder's age proof

6. Medical certificate as evidence of the cause of death

7. Deeds of re-assignment/assignment (if applicable)

Insurance companies categorise the insured member's death into two types based on when the policy was purchased: Early death and non-early death. If the policyholder passes away within three years of purchasing the policy, it is considered an early death. In such cases, the insurance company may undertake the following procedures:

• Verify with the hospital to confirm if the policyholder was admitted there at the time of death.

• In the event of an air crash, they may contact the airline to check if the insured member was a passenger.

• Request a medical certificate if the cause of death was medical or unnatural.

• If the cause of death was suicide, accident, or murder, the insurance company may require a police First Information Report (FIR) and the post-mortem report as supporting documents.

Conclusion:

To ensure a smooth claim settlement process, it is highly advisable to provide accurate and honest information when filling out your insurance application. Failing to do so can result in claim rejection, leaving your family vulnerable during challenging times. Before purchasing a term life insurance policy, it is also recommended to compare different options and assess the claim settlement ratio of insurance providers to gauge their reliability.

KETKI JADHAV is a Content Writer at PersonalFN since August 2021. She is an MBA (Finance) and has over seven years of experience in Retail Banking. Ketki specialises in covering articles around banking, insurance, personal finance, and mutual funds and has been doing it for over three years now.

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Disclaimer: This article is for information purposes only and is not meant to influence your investment decisions. It should not be treated as a mutual fund recommendation or advice to make an investment decision.