How long does it take to settle a term insurance claim?

Most insurers process death claims within 30 days, provided all documents are in order.

Can a claim be made if the nominee is deceased?

Yes, if the nominee has passed away, the legal heir can claim the insurance benefits.

Will an insurance claim be rejected if the policyholder has a pre-existing illness?

If the illness was disclosed at the time of policy purchase, the claim will be processed. Non-disclosure can lead to rejection.

What should I do if my claim is rejected?

If your claim is rejected, you can appeal to the insurer or escalate it to the insurance ombudsman for resolution.

Can I file a claim online?

Yes, most insurers offer online claim submission and tracking facilities for ease of processing.

What documents are required to file a term insurance claim?

Essential documents include the death certificate, policy document, nominee’s identity proof, and bank details for fund transfer.

Does the insurer investigate every claim?

Not necessarily. However, claims related to accidental or unnatural deaths, high-value policies, or cases with missing documents may undergo additional verification.

Can a claim be rejected due to incorrect nominee details?

Yes, if the nominee’s details do not match policy records, it can lead to delays or rejections. Always ensure nominee details are updated.

Are term insurance claims taxable?

No, as per Section 10(10D) of the Income Tax Act, the sum assured received by the nominee is tax-free.

Can I change the nominee in my term insurance policy?

Yes, policyholders can update nominee details anytime by informing their insurer and submitting the required documents.

When can we claim term insurance?

You can claim term insurance when the policyholder passes away during the policy tenure. The nominee must file the claim with the insurance company by submitting the required documents.

Claiming Term Insurance After a Policyholder's Death

Term Insurance is a Life Insurance Plan that offers a death benefit to the policyholder’s beneficiaries if the policyholder passes away during the policy duration. To initiate the claim process, beneficiaries must notify the insurer, complete the Death Claim Form, and submit the required documents for verification. This article outlines the step-by-step process for a claim settlement and the necessary documents. Understanding these steps ensures a smooth Insurance Claim process for the family during a challenging time.

Term Insurance is a Life Insurance Plan that offers a death benefit to...

Why is Knowing the Term Insurance Claim Process Important?

While purchasing a term insurance policy ensures financial protection for your loved ones, making them aware of how to claim term insurance after death is equally vital. Imagine a scenario where your family is left struggling with documentation and technicalities during an already difficult time. To avoid this, it's best to ensure they know:

The steps involved in how to claim death insurance
The documents required to submit a claim
How to avoid common term insurance claim rules issues

By being prepared, your family can receive the payout smoothly and on time without unnecessary stress or delays.

What is the Purpose of Your Term Insurance Claim?

A term insurance claim serves different purposes depending on the type of claim being filed. Understanding these claim types ensures clarity when submitting a request:

Maturity Claims

If the policy includes a return of premium (ROP) feature, the policyholder receives a payout upon completing the policy tenure.

Death Claims

If the policyholder passes away while the policy is active, the insurance company disburses the sum assured to the nominee or legal heir.

Rider Claims

Term insurance policies often include additional riders, such as accidental death or critical illness benefits. If the policyholder had opted for these, the nominee may receive an extra payout beyond the base sum assured.

Recognising the financial and emotional challenges faced by families after losing a loved one, insurers strive to make the claim settlement process seamless, efficient, and quick. Understanding these claim types can help ensure a smooth experience during the process.

The Procedure of Death Claim Settlement

Here’s a list of steps that the beneficiary must follow for how to claim term insurance after death:

Step 1: Notifying the insurer

This is the first step the beneficiaries must take to claim a death benefit.

The first step in how to claim term insurance is notifying the respective insurance provider of the policyholder's demise, the beneficiary can use the customer service number, visit the branch, or email the respective insurance provider.
The beneficiary will be requested to disclose the policyholder's name, latest address, date of birth, and reason for death. The name, contact details, and how the beneficiary relates to the policyholder must also be cleared out.
Not just that, the beneficiary is also expected to know the policy number (which will be found in the policy documents) and other relevant documents needed to file a claim. In some cases, the insurance provider may ask for an original death certificate to validate the death.
Notification of the policyholder's death must be made within the time limit set by the insurance company. However, this limit may differ from company to company. Most insurance companies follow a time limit of 30 days from the policyholder's death date.

Step 2: Fill out and submit the death claim form

To proceed with the application for insurance claim after death, the nominee must complete the insurer’s claim form with all relevant details, including the policyholder's name, age, reason for death, and other relevant information as required by the insurance company.
Keeping all the necessary documents in hand will ease the process of filing the death claim form.
If no beneficiaries are assigned, the claimant must prove that they are legally entitled to receive the claim.
Once all the necessary details are filled in, it is time to submit the form. The beneficiaries can submit the form either by heading to the home branch where the policy was issued or through online mode, if available.

Step 3: Submit all the relevant documents

All the required documents requested by the insurance provider must be submitted to continue the claim process.
The documents needed will depend on the kind of death undergone.
These documents typically include the original or a certified copy of the death certificate, the policy document, any medical records related to the cause of death, and proof of the beneficiary's identity and relationship to the deceased.
It's essential to gather these documents as promptly as possible to avoid delays in the claim process. If the death was due to an accident, additional documents, such as a police report or an autopsy report, might be required.
Each document helps substantiate the claim, ensuring the insurance provider has all the facts needed to evaluate the claim. Careful attention to completing this step thoroughly can significantly smooth the subsequent processing and evaluation stages.

Step 4: Evaluation of the claim by the insurance company

Once the insurance company receives all the necessary documents, it will evaluate and analyse them.
The insurance company will verify all the documents submitted, including medical reports, police records and other necessary documents.
The evaluation process for each kind of death will be different. For example, detailed investigation time may be required if the policyholder has died within 3 years of buying the policy.
At this stage, the insurance company will decide whether the claim must be settled or rejected. If the claim is accepted, the insurance company will pay the death benefit. If not, the reason for the rejection will be stated.

Step 5: Settlement of the death Claim

After the claim has been accepted, the insurance company will settle the claim amount to the beneficiary either in a lump sum or in instalments, concerning terms and conditions.
This claim amount will be deposited directly to the beneficiary's bank account.
Beneficiaries must understand the tax implications of receiving a death benefit, which can vary depending on local laws. Beneficiaries should also be prepared for any potential financial planning required once the funds are received.
This might include consulting with financial advisors to ensure the money is managed wisely, potentially setting up trusts or investments, and considering how the funds can best contribute to the beneficiary's long-term financial stability and goals. Understanding how to claim life insurance after death ensures a smoother payout process.

Note: This is an overview; the exact steps and the process will depend on the insurer.

Documents Required to File a Claim After a Policyholder's Death

To file a death claim for a Life Insurance Policy, beneficiaries must gather essential documents to support a smooth insurance claim process. Requirements vary by cause of death and policy type. Below is a list of necessary documents, including those needed for medical or accidental death cases:

General Documents (For All Claims)

Original policy documents
Correctly filled death claim form
Original death certificate (signed by medical practitioner or issued by government authority)
Beneficiary’s statement with details about themselves and the policyholder
Identity proof of the beneficiary (Aadhaar Card, Voter ID, PAN Card, Passport, etc.)
Age proof of the policyholder
Cancelled cheque and NEFT mandate.

Additional Documents - Medical Illness

Doctor’s statement: Details from the last treating physician, including diagnosis, treatment timeline, and cause of death.
Proof of Treatment: Hospital records or treatment notes, including admission details, medical tests, treatments administered, and duration of treatment.

Additional Documents - Accident/Unnatural Death

Registered Copy of the FIR: Filed with police, detailing the circumstances of the accident or incident.
Post-mortem Report: Autopsy report prepared by a forensic pathologist, showing the cause of death due to external injuries, trauma, or other factors.

What are some Factors to Consider Before Claiming a Death Benefit?

Before initiating a death claim for a life insurance policy, it’s important to review several critical factors to ensure a smooth insurance claim process. Here are key points to consider:

Understand the Death Claim Time Limit

Most insurers have specific timeframes for notifying them of the policyholder’s death. This claim intimation period, often within 30 days after my death, is crucial. Missing this time limit can complicate the death claim process.

Document Requirements

Gather all necessary documents, such as the death certificate, the original policy bond, and the completed death claim form. Accurate documentation is essential for the insurer to validate and process the application for a deceased claim.

Review of Policy Terms and Conditions

Understand the specifics of the death insurance policy and any exclusions that may apply. Reviewing death claim rules ensures you’re clear on what’s covered and whether the policy includes death claim settlement without nomination options if no nominee was assigned.

Legal Evidence of Title

If no beneficiary was assigned, additional legal proof may be required. Submitting an application for deceased claim along with legal evidence of title ensures the rightful claimant receives the death claim amount.

Type of Claim(Death or Maturity)

If the policyholder survived the policy term, it becomes a maturity claim instead of a death claim. In such cases, filing the maturity claim form and discharge form will be necessary to access the maturity form benefits.

Tax Implications and Financial Planning

Receiving a death claim amount may have tax implications. Consulting a financial advisor helps beneficiaries make the most of the death claim settlement and plan for long-term financial stability.

How to Claim

Beneficiaries should know how to claim by contacting the insurer promptly, submitting a correctly filled death claim form, and providing complete life insurance information. This includes understanding what is claim in insurance and the steps involved to avoid delays in the death claim settlement.

What are the Conditions for a Term Insurance Claim?

Before a term insurance claim is approved, certain conditions must be met:

Active Policy Status

The term insurance policy must be in force at the time of the policyholder’s death. If the policy has lapsed due to unpaid premiums, the claim may be rejected.

Exclusions and Waiting Period

Certain causes of death may not be covered by the policy. Common exclusions include:

Suicide within the first policy year
Death due to illegal or criminal activities
Fraudulent claims where incorrect information was provided during policy purchase

Waiting Period Clause

Some policies have a waiting period (especially those with no medical tests). If death occurs within this period, the claim may be denied.

How to Ensure a Smooth Term Insurance Claim Process?

To avoid unnecessary delays or rejections, follow these best practices:

Pay Premiums on Time: Ensure the policy remains active by making timely premium payments.
Keep Documents Updated: Maintain copies of policy documents, nominee details, and proof of premium payments.
Inform Nominees: Make sure your family knows about the policy, its benefits, and the claim procedure.
Provide Accurate Information: Declare pre-existing medical conditions and lifestyle habits honestly at the time of policy purchase to prevent disputes during claim settlement.

By taking these steps, the nominee can experience a hassle-free claim process and receive the insurance payout without complications.

What to Do If the Insurance Company Delays Settlement?

A term insurance claim should ideally be settled within 30 days if all documents are in order. However, delays may occur due to various reasons, such as additional verifications, missing documents, or high-value claims requiring further scrutiny. If your claim is delayed beyond the expected timeframe, follow these steps:

Steps to Take If the Insurer Does Not Settle on Time

Check for Missing Documents – Ensure all required documents have been submitted correctly. Any discrepancies or missing information can cause delays.
Follow Up with the Insurer – Contact the insurance company via customer care, email, or by visiting their branch office. Keep a record of all communications.
Send a Written Complaint – If verbal follow-ups do not yield results, send a formal complaint to the insurer with all claim-related details. Insurers are required to respond within 15 days.

If the insurer fails to settle the claim within the stipulated time or does not provide a valid reason for the delay, you can approach regulatory authorities:

IRDAI (Insurance Regulatory and Development Authority of India) – IRDAI monitors insurance companies and ensures fair claim settlement. You can lodge a complaint via the IRDAI Grievance Redressal Portal (www.irdai.gov.in), call their helpline (155255), or email complaints@irdai.gov.in.

What Happens if the Policyholder Survives the Term?

Term insurance policies offer coverage for a fixed duration. If the policyholder survives the term, the outcome depends on the type of plan purchased:

Pure Term Plans

These policies do not offer any survival benefits, meaning there is no payout if the policyholder outlives the term.

Return of Premium (ROP) Plans

If the policy includes an ROP feature, the policyholder will receive a refund of the total premiums paid (excluding taxes and rider charges) at the end of the term.

Renewal or New Policy Options

If the policyholder’s financial needs persist, they can either:

Renew the existing term insurance (if allowed by the insurer)
Purchase a new term policy for continued coverage

Understanding these options helps in making informed decisions about term insurance coverage beyond the initial policy tenure.

What are the Types of Deaths Covered by Term Insurance Plans?

Term insurance typically covers:

Natural Death: Death due to old age or illness.
Accidental Death: Covered under most policies, but some may offer additional accidental death benefits.
Death Due to Critical Illness: If declared and covered under the policy.
Death Due to COVID-19 or Other Pandemics: Most insurers now cover this.

Exclusions:

Suicide within the first policy year
Death due to participation in hazardous activities
Death due to involvement in illegal activities

What are the Reasons for Insurance Claims Getting Rejected?

When filing an insurance claim, policyholders and beneficiaries must understand the common pitfalls that might lead to a claim being rejected. Here are the various reasons why an insurance claim might not be approved:

Contradicting Information

This occurs when the information provided in the claim form conflicts with the details initially provided when the policy was taken out or with documentation submitted at other times. For example, if the cause of death in a claim contradicts medical records or an autopsy report, the insurer might reject the claim due to inconsistencies.

Falsifying Information

Providing false information to an insurance company is a severe offence and can lead to the rejection of a claim. This might include lying about the policyholder's health status, the circumstances of death, or any other pertinent details that would affect the insurer's decision to cover the risk or pay the claim.

Delay in Premium Payment

Insurance policies stipulate that premiums must be paid regularly to keep the insurance active. If there are missed payments and the policyholder still needs to arrange for a grace period or reinstatement of the policy, any claim filed under such a lapsed policy is likely to be rejected.

No Mention of Nominee

If the policy does not have a nominated beneficiary or the nominee's details need to be updated or mentioned, it can complicate the claims process. This oversight might delay or even result in the rejection of the claim, as the insurer may need to verify who is legally entitled to receive the claim amount.

Undisclosed Medical Records

If a policyholder fails to disclose significant medical conditions or previous health issues when purchasing the insurance, the company may view it as non-disclosure or misrepresentation. This is particularly critical if the undisclosed condition is related to the cause of death, leading to potential claim rejection.

Undisclosed Previous/Existing Insurance Policies

Not disclosing other existing insurance policies can be seen as an attempt to over-insure, which can be a red flag for fraud. Insurers often require information about other policies to assess the policyholder's total coverage and evaluate the risk accurately.

Lapsed Policy

A policy lapses when the premiums are not paid within the specified time, leading to the termination of the policy's benefits. A claim made under a lapsed policy will only be entertained if the policy is reinstated, which usually requires paying all overdue premiums and undergoing any additional underwriting procedures required by the insurer.

Plan Ahead, Protect Tomorrow: Find the Perfect Term Insurance Today

It is important to have the right term insurance plan while planning for the future to ensure that your loved ones are well taken care of financially. A term insurance calculator can be helpful in assessing the coverage needed to provide the best-suited plan for your budget and protection goals. There are numerous life insurance plans available in India that cater to various stages of life, such as the best term insurance plan for 1 crore.

Knowing the features of term insurance will help you to make better decisions and ensure a safety net for your family in case of an unfortunate event. You will get flexible options regarding affordability or even high coverage to secure a peaceful future with term insurance plans. Evaluate several plans to make sure you get adequate coverage by benefiting from the best term insurance benefits that can be acquired in India.