Understanding the Claim Procedure of Term Insurance in Detail
Before investing in any term insurance, it is essential to compare various insurance plans based on a number of parameters and make an informed decision. After a fair comparison, you can select one that aligns with your requirements.
Usually, people just consider the benefits and the premium amount while selecting a term insurance plan. However, it is important to thoroughly go through the terms and conditions and claim settlement procedure of the insurance provider. And, choose an insurance plan with a hassle-free and straightforward claim procedure so that you can receive your claim amount in the minimum time possible.
Before moving forward to a detailed claim procedure, let us look at a few lucrative term insurance benefits:
1. Affordable Premium
One of the top benefits of buying term insurance is its affordable premium. You can avail of a high-value life cover by paying a reasonable premium at regular intervals, which may be monthly, quarterly, half-yearly, etc. Depending on your financial capacity, you can choose the sum assured and the tenure of your policy.
2. Pay Out of Sum Insured
If you have signed up for term insurance and you pay the premium regularly, your beneficiaries will receive the sum assured in case of your untimely demise. They just need to apply for the claim along with a few documents. The policyholder can choose to have this compensation either in a lump sum or in intervals. This amount will help your loved ones stay financially independent and live a well-settled life in your absence.
3. Rider Options
A basic term insurance plan might have certain exclusions. To overcome these, you can widen the coverage of your insurance plan by:
- Opting for a critical illness rider and getting a number of critical diseases covered.
- Opting for an accidental death benefit add-on to have life coverage in case of your untimely demise due to an accident.
4. Tax Benefits
Under Section 80C of the Income Tax Act, 1961, your premium payments are exempted from tax up to Rs 150000 per annum. The premium amount paid will be deducted from your taxable income. Therefore, you can avail of the dual benefit of life coverage and tax exemption.
5. Whole Life cover
Another benefit of a term insurance plan is the whole life cover. It offers you comprehensive coverage up to 99 years of age. A term insurance plan supports your family financially in case of your untimely demise.
Apart from knowing about the benefits, it is essential about the claim procedure before choosing the best term policy.
Term Plan Claim Settlement Process
1. Inform The Insurer
To initiate the claim disbursal process, your beneficiary should inform the insurance provider about the mishappening as soon as possible. There are certain documents required for the initiation of the process; find them below:
- Name and date of birth of the policyholder
- Policy Number
- Cause and place of death
- Details of the nominee
The nominee can either download the claim form from the insurance provider's website or visit the nearest branch for the same.
2. Keep Essential Documents Handy
Apart from the documents mentioned above, it is advisable to keep other documents ready while filing the claim to avoid issues and delays. Find them below:
- Age proof of the policyholder
- Death Certificate
- Policy Documents
- Any other document required by the insurance company
If the claim is filed within 3 years of buying the policy, the insurance provider might carry out the necessary investigation to ensure that the claim is genuine and the demise was not due to any pre-existing conditions.
3. Submitting Documents For Claim Processing
After the initiation of the claim, the insurance provider might require a number of other documents while processing the claim to cross-check a few critical things. Find them below:
- Properly filled claim form
- Deeds of assignment/re-assignment
- Post mortem report, if any
- Medical records (admission note, test report, discharge/death summary)
- Original death certificate with an attested copy issued by the local municipal authority
- Last medical attendant's certificate
4. Settlement of Claim
As directed by the Insurance Regulatory and Development Authority of India (IRDAI), the insurance provider needs to settle the claim within 30 days of receiving the claim request and other important documents. However, in a few cases, a special investigation is required before settling the claim. Under this, the claim should be settled within 6 months of policy intimation.
As a term insurance policy is subject to certain exclusions, it is essential to get yourself medically examined and disclose everything at the time of application. Disclosures might include a pre-existing ailment, your lifestyle (smoking habit), etc.
At the time of claim settlement, if the insurance provider finds anything misrepresented or fraudulent in your application form, your claim might get rejected. Therefore, it is important to choose a credible insurance provider and apply for the term insurance with a customer care executive's help if you face any issues. This will reduce the chances of claim rejection to the bare minimum and support your family in your absence.
Mithilesh Singh is a digital marketing consultant, blogger, and founder of World News Portal. He loves to assist freelancers, start-ups, and small businesses to use their website and products to drive more leads, traffic, and sales for enhanced revenue and growth.