“A man who dies without adequate life insurance should have to come back and see the mess he created,” says Will Rogers.
But what about the man who did get life insurance but the claim got rejected? You definitely do not want your family to be in a situation where despite having a life insurance plan, they get no financial support from the policy. Chances are that this may happen for several reasons and it is only in your hands to prevent that from happening. Hence, we have listed below some of the reasons that are more often than not the reasons for rejection of claims. So find out what mistakes you need to avoid when you get a life insurance plan.
1. You’re either concealing facts or misinforming your insurer
When buying the policy, DO NOT (and we say it again, do not) conceal any material facts regarding your medical or health history. For example, if you’re a smoker, let them know it. It will only increase your premium by a small margin but if you try hiding this fact, your claim may get rejected which will be a greater loss. Besides, do not provide wrong information. If you have a medical condition, i.e. a pre-existing disease, then do not hide it. Your insurers may anyway find out about it, so why hide it in the first place? Do not make this mistake because it may have greater repercussions when the claim is being raised.
2. Suicide has been committed within a year of policy commencement
You go to a top most floor, jump off it and you die. This is a case of suicide. Your insurers surely wouldn’t cover this. However, some insurers do cover suicides as well, but not if committed within the first year of the policy term. So be careful of what you choose to do.
3. You failed to pay premiums regularly
It is fundamental to pay premiums on an insurance policy because that’s how an insurance policy is designed to be. So, if you do not oblige to this basic condition, then it doesn’t make any sense to think that the insurer is still bound to pay the coverage amount. The insurer will definitely give you a few chances by reminding you to pay your outstanding premiums but if it gets too late, they will cancel the policy and inform you of the same.
Apart from the above points that are usually the reasons of rejection, there’s another mistake that you shouldn’t be making or it may lead to delay in claim settlement. And that is – Forgetting to appoint/inform your nominee of your insurance policy. This can’t happen. The first thing you need to do after purchasing a policy is to appoint a nominee. You must also inform him/her about your life insurance policy on which they can rely for financial support when you’re not around.
Besides, there are possibilities that the policyholder will change his/her nominee because s/he no more shares the same relations with the nominee appointed earlier. Let’s say, you got divorced and remarried. These things may change your decision as to who should benefit from your life insurance policy. So, inform your insurer and get the policy updated and inform your new nominee as well, or the right nominee may have a tough time in getting through it.
Parting words – You must have heard this umpteen times for sure, “read the policy documents carefully”, and now is the time to literally do that. Go through all the papers carefully, especially exclusions. Also, keep in mind the aforementioned 3 points before signing on the dotted line.