Types of Term Insurance Claims

If you pass away while your policy is active, your beneficiaries can request a death claim. In the death benefit claim, your insurance company will pay your beneficiaries as long as all their particulars and documents match your policy details.

This is not a common type of claim, as maturity benefits are not usually associated with TI policies. They can come in the picture if you have a Return of Premium rider. Unlike most of the other Term Insurance claims, a maturity benefit claim is the amount you receive when you outlive your policy. You get a sum assured when your policy matures or expires. To claim your policy on time, apply at least a month or two before your policy expires.

A rider is an add-on benefit that you can purchase for your Term Insurance plan. Usually, riders can maximise the benefits and coverage of your plan. The following riders offer you or your nominees a payout when you or they claim it. 

• Accidental Death Benefit claim: In some kinds of term plans, your insurance company may have an extra death benefit known as the Accidental Death Benefit. Here, your beneficiaries are entitled to extra compensation if you unexpectedly pass away because of an accident.
• Critical Illness claim: If you purchased a Critical Illness rider, you're entitled to coverage if you get a long-term illness. Usually, your insurance company will list the illnesses they cover, and if you're diagnosed with any of them, you or your beneficiaries will get a lump sum payment. 
• Disability claim: A disability rider offers coverage in the rare event that you become disabled and cannot work anymore. If this happens, you or your beneficiaries will get a regular payout to cover your expenses.

A term insurance claim commonly takes place when your nominee raises a request so they can claim your policy's sum assured. When the claim is accepted and processed, your insurance company will pay your nominee the sum assured by your policy.

There are three main categories of Term Insurance Claims: maturity benefit claims, death benefit claims, and rider benefit claims. 

Except for some rider claims and maturity claims, all other claims are usually from the death benefit claim. 

To claim a death benefit on policy, you (as a beneficiary) need to submit the policyholder's death certificate, and establish your relation to them and prove that you are the nominee. If the insurance company accepts your claim, you will usually be paid out to your bank account.

The waiting period for processing a term insurance claim typically varies depending on the insurance company and the circumstances of the claim. It usually ranges from a few days to a few weeks.

Yes, multiple nominees can be listed in a term insurance policy. This allows policyholders to allocate the sum assured among different individuals as per their wishes.

In such circumstances, the insurance company may conduct an investigation to determine the cause of death. The claim might be delayed until the investigation is completed, and if foul play is suspected, it could impact the outcome of the claim.

Term insurance claims are generally not subject to income tax when paid out to the nominee(s) in the event of the policyholder's death. However, any interest earned on the claim amount might be subject to tax as per the prevailing tax laws. It's advisable to consult a tax advisor for personalised guidance.