Reasons Why Term Insurance Claims Get Rejected

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When you decide to buy a term insurance plan, it mostly is to protect your loved one in case something unfortunate happened to you. But what happens when your beneficiary’s claim gets rejected? Suddenly the financial backup you secured for them is no more accessible, compelling them to find another way to make ends meet. So, before you commit any mistakes that can lead to claim rejection, let’s look at the reasons why this happens.

1.   Providing False Information

Many times policyholders end up giving incorrect personal information like their age, occupation, weight, and height, amongst others. Also, if individuals practice smoking or drinking, they tend to hide it from the insurer due to the increase in the premium price. But this can affect your beneficiary’s claim in the future, leaving them without any financial aid.

2.   Death Not Covered by Policy

Sometimes the insured dies due to a condition that is not covered under the insurance policy. It can happen when you had a pre-existing disease that was not revealed to the insurer or was not covered by the insurer. This can also take place when you get diagnosed with an illness during the policy term. Due to such reasons, your family’s claim can get rejected. Thus, it is recommended to go through your policy papers to understand the deaths that are not covered by your insurer to avoid the financial blow.

3.   Not Updating Your Nominee

It can happen that you bought the term insurance plan when you first started earning and named your parents as the nominee. Later you moved away and got married but forgot to update the nominee. Now, your spouse is not able to claim the death benefit because your partner is not named as the beneficiary of the plan. Such a situation can cause your spouse’s claim to get delayed or even rejected, leaving them without any support. Hence, you have to keep reviewing your policy periodically to evade such a time.

4.   Death during Contestability Time

Contestability time lasts for a year or two, depending on your insurer. If death occurs during this time, your claim can get rejected due to suspicion. The insurance company has all the right to deny the claim. But if it’s genuine, the insurer will investigate the death and the information provided by you in the policy papers.

5.   Failing to Pay Premiums

If you have been unable to pay many of your premiums during your policy term, your claim can get denied. The insurer can decide to reject your claim for a lapsed policy. You get a grace period to pay all your dues and continue your plan. But if you thought you didn’t require the policy and missed the grace time, your nominee cannot claim the sum assured.

6.   Having Multiple Policies

You can also lose the claim if you did not reveal the other policies you hold. You have to let your insurer know about the other insurance policies you had or have. Thus, you should not hide such information and be honest with your insurer.