Every day, we come across many complaints about the agony being faced by customers in trying to claim money from life insurance companies.
Normally, a life insurer's endeavour is to settle all genuine claims at the earliest. Some basic care taken at the time of applying for the policies can go a long way in ensuring smooth claim settlement irrespective of the company the person deals with.
First and foremost is the selection of the right product. The customer needs to evaluate his/her requirement and the cash flows he/she needs to commit to keep the policy, and hence the benefits, in force. There is no point in taking a product that promises great benefits, but whose premium the customer cannot afford. If the premium is not paid regularly, the customer risks losing the primary benefit of the insurance cover. There has been an instance where on a pension policy with a lock-in of three years, a claim was lodged because the money was needed for a marriage, even though the life assured was still alive!
While choosing an insurance company, do not decide on the claim settlement record shown by a sales person. Claim payment record is a factor of vintage and the customer base the company has. Typically, in a new company, almost all the claims will be an early claim as all of them would be within 1-2 years of commencement, which will necessarily force the insurance company to investigate each case. Whereas, for a company which has been in existence for more than 5-6 years, there will be lesser number of cases going for investigation and, thereby, a better claim payment ratio. Therefore, the key for a successful claim settlement is in proper disclosure of facts rather than the vintage of the company.
Having decided to go in for the right product, go through the proposal form carefully and ensure that it is filled up properly and that all known facts are disclosed. It is always better to fill up the form yourself rather than relying on an agent. The general apprehension in the market is that disclosure of common conditions like diabetes, BP, asthma, etc, would result in an adverse evaluation while the company processes a case in underwriting. On the contrary, insurance companies have loading for various conditions and occupations' risk and the customer can still benefit to enjoy full coverage on paying the little extra premium. A wrong disclosure or nondisclosure results in rejection of a claim at a later point. The irony is that the wrong/non-declaration at the time of filling up the proposal actually make the claimant rather than the policy owner run from pillar to post and feel dejected at the end of the day since the claim gets repudiated.
Avail of the nomination facility and nominate near relatives only. Avoid nominating others as far as possible. If the nominee is a minor, add an appointee who can receive the claim money during the minority of the nominee. Update/modify the nominee in case of events like marriage of the life assured or death of the nominee, etc.
Having bought a product, please go through the policy docket carefully. The entire terms and conditions and also the copies of documents submitted with the proposal form should be examined to ascertain that every thing is in order. Any anomaly noticed should be immediately brought to the notice of the insurance company.
Another important point to be noted is to keep the family members/beneficiary informed about the policies, including where the documents concerned are stored, etc. Since insurance is a long-term contract, people tend to lose track of important documents, including policy documents.
Keep paying premiums regularly. It is necessary to keep the policy in force, in order to obtain the full benefits of the policy in case of the unfortunate event.
Insurer understands the need of the beneficiary to obtain the claim amount at the earliest. Normally, the insurer will try to settle a claim within a week of receiving all the relevant documents, if the policy has run for a minimum of three years. However, to protect the interests of the other existing policyholders, the insurer declines claims where material information is not disclosed/incorrectly stated by the proposer at the time of application. To identify such policies, the insurer investigates the "early" claims — claims that occur before the completion of three years from the inception of the policy. As these investigations require time and effort in obtaining the information, there may be a delay in the settlement of claim; the delay sometimes could even be for months.
Before submitting the claim, ensure that the insurer is informed immediately about the unfortunate event for which the claim is being made. Give the correct policy number and mention other policy details if necessary. Also ensure that all the relevant information and documents are made available to the insurer, particularly in case of accidental death.
To summarise, while you are applying for any life insurance plan, the application form should have the necessary disclosure from your end and it should provide the desired returns to meet your future needs and it should also match your present capacity to pay. You can rest assured that life insurers will have to certainly pay all genuine claims wherein the policy owner has disclosed all material facts necessary for the insurance contract.
