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Why life insurance claims are rejected? 

A Life Insurance plan provides financial safety in times of crisis. It provides great relief to the family when the sole breadwinner passes away due to an unfortunate loss of life. 

Author:Atri Chakraborty | Date:04 Nov 2022 | Time:15:49:00

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A Life Insurance plan provides financial safety in times of crisis. It provides great relief to the family when the sole breadwinner passes away due to an unfortunate loss of life.  

However, it is not uncommon for insurance companies to reject a false life insurance claim. An insurance claim may get repudiated or rejected due to various reasons, knowing them would help in avoiding the rejection of a claim.  

Let us go through the reasons why life insurance claims could get rejected: 

1. False Information: This is the most common thing that happens when a policy is being issued. Some individuals tend to hide or conceal their personal details in an attempt to reduce their premium amount. A term insurance is offered basis your age, medical history, lifestyle choices, level of income, and line of work. People risk having their insurance application rejected if they withhold any of the above information or if it is incorrectly disclosed. Some people even quote an inflated income to get a higher sum of assured benefits. To prevent your family from suffering unnecessarily, it is crucial to fill out the application form honestly and promptly. 

2. Undisclosed medical history: This is another major reason why an insurance claim is rejected. Not disclosing pre-existing health conditions at the time of purchase of an insurance plan may lead to a claim rejection in the future. In order to avoid this issue during the claim filing process, all medical disclosures should be made. Accurate reports concerning the most recent medical records and any previously existing medical conditions must be correctly and honestly disclosed in the application form. 

3. Unentitled nominee: A nominee is a person who is entitled to the benefit in the event that the insured person passes away. The processing of the claim may get delayed if the policyholder did not have a nomination on file. An insurance company requests documents to show the line of succession in the absence of a nomination. Claims will still be fulfilled provided the family members submit the required paperwork. 

4. Not disclosing information about the previous policies held: As per the guidelines, not disclosing information, or giving incorrect information about the policies that an applicant is currently holding or has previously held may lead to rejection of death claim. The insurance company may totally reject a claim if the policy was rejected by another Insurer or issued with additional terms. Disclosing the previous or current policies is essential while buying an insurance plan. Non-disclosure or hiding of material facts may lead to rejection of the contract and claims by the Insurance Company.

 5. Inaccurate disclosure by Non-Resident Indians: In case of NRI policyholders, the underwriter needs to know the name of the nation where the life insured is residing in order to make a decision about the life coverage. There are some nations where insurance coverage is not offered in accordance with our agreement with reinsurers. This could be denied at the claims stage if it is not reported at the onboarding stage.

Hence, insurance claim rejection is more painful than the crisis itself. In order to ensure that it is submitted correctly, sufficient care must be taken. Please verify the provided information thoroughly.

BY

Atri Chakraborty

As the Chief Operating Officer at IndiaFirst Life, Atri Chakraborty oversees the entire gamut of designing, implementing and managing business operations. He is responsible for Distribution & Branch Operations, Customer Service, New Business & Underwriting and Claims. With over 26 years of rich and diversified experience in the BFSI sector, Atri has dedicated 17 years plus in the insurance domain. Over the years he has been successful in transforming service delivery, achieving process excellence, facilitating digital transformation, synchronising program management, and overseeing operations management during his tenure at various organisations. Prior to joining IndiaFirst Life, Atri was Chief Operating Officer with Ocare Health Insurance Ltd and prior to that with Tata AIG General Insurance Company Limited for over 16 years where he last served the organisation as its EVP and Chief of Operations & Facilities. Atri has worked with Citibank India for close to seven years. Beyond these, he has also been associated with Gujarat Lease Financing Ltd and United Credit Financial Services. Atri holds a Master’s degree in Management Studies from Birla Institute of Technology & Science (BITS), Pilani.

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