What is a Life Insurance Claim?
Life Insurance is actually a Protection tool, whereby if anything happens to the insured, the family should not suffer from financial instability. Thus, Life Insurance is done by an individual, so that in case of an emergency where the earning of the insured stops, the financial situation can be handled by the insurance company by means of the coverage amount. The price an individual pays for the insurance coverage is called the Insurance Premium.
Types of Life Insurance Claims:
When it’s time for the Insurance Company to pay money to the policyholder, it is called an Insurance Claim. Claims can be of 3 different types, namely Death Claim, Maturity Claim and Survival Claim.
When the policyholder dies, the amount of money payable to his family is called the Death Claim. Depending on the type of Insurance cover availed and the policy taken, the Insurance Coverage can also vary. However, there is always a minimum Sum Assured that is definitely payable to his nominee on death of the life insured.
Death intimation is very important in such a case. This is the most common form of Insurance Claim where people are worried about the settlement amount that is the Death Claim, as there are lots of rules and regulations that the Insurance Company will follow before they pay out the Claim Amount. Proper information, documentation, etc are required in this case.
According to Section 45 of Insurance Act 1938, if death occurs within 2 years of the policy inception, then proper investigation is done before the claim is settled so as to check whether the facts stated on the proposal form at the time of taking the policy had been true or there has been a non-disclosure or misrepresentation of material facts. If the facts stated at the time of taking the policy are not found true, then the claim can also be repudiated and the nominee would be denied of any policy money.
When the insurance policy matures, the Maturity Claim is paid to the insured person. It is usually an easy process, where the life insured is required to apply for the same through duly filled up policy-discharge form and then the maturity claim is settled directly in the bank account of the insured. In fact, the insurer proactively sends out the policy discharge form well in advance to expedite this claim procedure! This is the simplest form of Insurance Claim.
When money is due to the policyholder before the policy matures, provided he is alive, it is called the Survival Claim. It is usually settled like a Maturity Claim. This type of claim arises in policies like Money Back Plans where the money comes back to the policyholder at regular intervals of 5 to 10 years.
When Life Insurance Policy is taken, it is usually done as a Protection tool for the financial stability of the family. Thus, it comes in most handy in case of the death of the life insured, where the money is required by the family to run daily expenses.
Maturity and Survival Claims are anticipated money and the expenditure can be planned well in advance as their time is known. Death Claim amount cannot be planned as the time of the death of a policyholder cannot be predicted.
Thus, people are most worried in death claims, as the person who is insured is not around and his nominee might not be well versed with the claim procedures, thus making the process even more lengthy and cumbersome. Hence, each and every individual should be aware of the policy details and the claim procedure so that in case of an emergency, it doesn’t seem too much of a pain to get it settled!
The 5 must know things about getting an Insurance Death Claim can be jotted down as:
- After recovering from the initial shock of the death of the life insured, the Insurance Company needs to be notified soon of the claim. Delay may lead to unnecessary complications!
This is because a lot of people are either not aware of the life insured’s insurance policy or they are ignorant about intimating the Insurer or a delay happens due to some other unforeseen reasons. But whatever the reason may be, a delay will certainly complicate issues as more inquiry may arise. Thus the safest and the best practice is to intimate the Insurance Company as soon as possible and initiating the process of getting the claim.
- Contact the agent, who will assist in getting the claim. Collect the death claim form.
An agent’s key responsibility is to assist the policyholder in getting the claim. Since he is the one who had initiated the policy documents, he would be the best person to get the claim out most effectively and efficiently. Thus, the agent who helped the policyholder in buying the life insurance needs to be contacted.
In case, the agent is not known or not contactable, then the Insurer’s office needs to be contacted.
- Who is the nominee and/or who are the legal heirs? Who is the actual owner of the policy money?
The nominee is the person who needs to fill up the details and submit the claim discharge form for initiating the process of getting the death claim. Hence knowing who the nominee is, if mentioned in the policy form or who the legal heir, the rightful owner of the policy money is; becomes of prime importance.
A lot of people are ignorant about insurance procedures, especially in India. Hence quite a large number of nominees are not even aware that their family member has taken a policy and has mentioned his/her name as the nominee. For example, a son has made his mother a nominee but didn’t even inform her of the same. Thus, if anything happens to the son, the mother would not even be aware that his son had an insurance policy, let alone claim the same!
- Documentation needs to be in order for a speedy claim discharge. If all documents are in order and the claim discharge form has been duly filled by the nominee, the claim process is automatically speeded.
The minimum necessary documents for filling an Insurance Death Claim are:-
- Original death certificate is mandatory for any death claim.
- Policy document/ last premium receipt- proof that the policy is in force
- Beneficiary’s identity and age proof
- Bank Account of the nominee needs to be ready to receive the claim. Name and address should be the same as mentioned on the insurance policy so that no delay happens in the process of rejection or correction of the claim cheque issued by the insurer!
If all the above procedures are followed correctly, there is no reason for a delay happening in getting an Insurance Claim. In case of some death complications or an early death claim, i.e. within 2 years of issuing the policy, or there is a chance of a moral hazard, then the insurer might take some time before releasing the claim money.
Usually, it is a very speedy process as even the insurer is aware that the family needs the money and they would not delay the process unless there is a definite requirement of the same. Thus, the best practice is to declare all possible details in the policy form while issuing the policy, so that no unnecessary inquiries happen at the time of getting the claim. Also, it reduces the burden on family members if the claim is an easy and clean process, as they are more worried about the policyholder’s death than worry about the how to get the insurance claim money.