We purchase health insurance, motor insurance, and life insurance to ensure financial security in case of an unexpected event that could put us in a severe money crunch. whereas we experience frustration, disappointment, and monetary loss if they don’t accept the claim therefore This is one of the primary reasons many people hesitate to buy insurance. ‘Claim Rejection’ is like failing an exam but there is a certain reason & that’s why the claim got rejected.
However, statistics show that in 2019-20, a little over 14,000 out of 1.8 million death claims in the life insurance sector were rejected, while the rest were paid.
The Protection of Policy-Holder Interest 2017 regulations mandate that all documentation must give simultaneously within 15 days of the intimation. Claims decisions must be clear within 90 days. Payments should be within 30 days of the decision, and insurers must pay 2% above the current bank rate in case of delay.
Why Claim Rejects and How to Prevent Rejection
1. Proposal form not filled properly: Many purchasers leave the form-filling task to agents because it is a time-consuming chore. However, this could result in mistakes regarding important details such as the spelling of your name, full name or initials, age, gender, income, occupation, address, telephone number, etc.
Solution: Fill out the form yourself honestly and without hiding any information. Keep a copy of the form so that if you notice any discrepancy after submission, you can get it rectified immediately.
2. Non-disclosure of medical information: Knowingly/unknowingly, concealing information about your medical history/condition can lead to rejection at the claims stage.
Solution: If you have pre-existing conditions such as heart disease/diabetes, it must be recorded on the policy. This can prevent the rejection of the claim.
3. Lifestyle & habit: Some insurance claims may be rejected if death occurs due to participating in dangerous activities, smoking, risky sports, and leisure pastimes. For instance, riding powerful motorcycles, participating in adventure sports, working in a risky job at heights, etc., could be dangerous, and hazardous, and your claim will reject on the grounds of material misrepresentation.
Solution: Ensure that you provide information while purchasing the policy. You can also approach the IRDAI to arbitrate on your behalf if your claim does not approve on such grounds.
4. Not reading policy documents carefully: Check if the insurance policy aligns with your needs. Read the exclusions list in detail. Sometimes, wrong clauses or details may be included.
Solution: Make sure that you read the document thoroughly and if you notice discrepancies, inform the insurer in writing immediately to correct the errors.
5. Non-payment of premium: or not paying by the due date can be grounds for insurers to deny claims. Policyholders have a right to know whether premium-due notices are on the correct address and whether there was adequate warning of policy lapse.
Solution: Ensure that you pay your premiums on time. Keep a reminder on your calendar so that it becomes a routine activity.
6. Beneficiary: In some cases, the beneficiary is not correctly named, or their details are not provided.
Solution: Make sure that the beneficiary details are there, and in case there is any change in address, status, or name, inform the insurance company immediately.
7. Not informing insurer within stipulated time: Health insurance policies mandate that the insurer be informed within 24 hours of hospitalization.
Solution: Ensure that your insurer is contacted immediately. Inform your family members that this is the top priority if you are unable to do it yourself.