Long-term care insurance information, form and stethoscope.Term insurance
Term insurance is usually bought for the long term, usually up to the age of retirement. People considering to buy term insurance, hence want to take time and be double sure, before they sign up for any product.
One of the primary concerns is with respect to claims settlement. Customers usually want assurance that their nominee(s) do not have to go through the hassles of follow-up and running around offices, for getting the insurance claim paid.
Term insurance in the true sense is a very simple product with very little fine print. If the applicant/customer has been careful, clear and honest during the application process, there are almost no chances that a claim can get declined or delayed.
Here is a list of the most common mistakes people make when buying a policy, which then result in claims getting declined or delayed:
Missing, incomplete or concealed information: Most common mistake one can make is at the time of filling the proposal form. Form filling is generally seen as a time consuming, tedious activity. Don't try to get lethargic while filling the form, or worse, leave it to your advisor to fill up your proposal form. There are chances that incorrect or incomplete information gets submitted to the insurance company, which could increase the risk of a claim getting rejected. Remember, your term insurance plan is going to be issued on the information provided in the proposal form and it will form a part of the contract.
Non-Medical information: Information related to your geographical location, occupation, income, etc. should be disclosed completely. When filling the proposal form you must select the right occupation and qualification. The questions asked in the proposal form play an extremely important role in the insurance company's decision to accept or reject your insurance application. Hence, if this misinformation is found at the time of claims, it can result in claim getting declined.
Medical, lifestyle, family information: Pay special attention to sections related to lifestyle, medical history and family history. Do not miss or hide information related to your health and lifestyle especially in smoking and alcohol-related questions.
Pre-existing diseases: This information plays a significant role when a customer wishes to attach some health-related riders/add-ons, like critical illness rider, with the basic term life insurance plan. Being a health-related cover, it is very important to disclose about any pre-existing conditions. Currently, new term insurance plans come with inbuilt critical illness benefits.
Avoiding medical test: If you chose a sum assured higher than on-medical limits of the insurer, you would be asked to go through some medical tests. Do not ignore these medical tests and try to get a policy by reducing sum assured within the non-medical limits. The costs of these medical tests are taken care of by the insurance company. The more information you provide about yourself, the lower are the chances of claim rejection. These tests can also come in handy for you. With early detection of diseases, proper treatment can be taken. By avoiding medical tests, you are increasing the chances of facing a claim rejection.
Nomination details: You must keep your nomination details updated at all the important stages of life. For example: Let's say that a person was single when he bought a term plan. He named his parents as the nominee to the policy. However, after marriage, he forgot to update the nominee details, even when the parents passed away. Now if something unfortunate were to happen to him, his wife and children would have to run from pillar to post for claiming the proceeds of that term insurance plan. It could also lead to nasty legal battles among family members for claiming the benefits. Nomination should be done and updated for all the financial products you possess. It is recommended to write a will and get it registered to ensure complete peace of mind.
Lack of awareness: Many times, our family members do not know 'How to make a claim?' To keep them prepared for such unfortunate events, make it a point to inform your family about the life insurance policies you have. Share the policy details along with the list of documents required to file a claim along with phone number of important people who could help in filing the claim. It is not easy to discuss matters related to our death with our loved ones, but for their happiness we must do it, at the earliest.
Policy lapse: The first criteria for getting your claim is policy should be in-force. You must always pay your premiums on time to keep your policy in-force.
Delay in claim filing: Delay in filing the claim beyond a stipulated period of time could raise unnecessary suspicion with the insurance company. The insurer can call for prolonged investigations. Such activities can take an additional time and delay claims payment.
(The writer is Director - Health, Life and Strategic Initiatives at Coverfox.com)