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Term Insurance April 17, 2020
You buy a term insurance plan to solely cover yourself and ensure your family gets the death benefit if you die within the policy period. To ensure this happens, you need to be aware of how to file a term insurance claim in the event of death and convey it to your family as well. Thankfully, the process is quite simple and easy to complete. Take a look at this article to know all about the term insurance claim process.
Table of Contents
Let us begin by understanding how this is done:
First and foremost, the insurer needs to be contacted at the earliest. The nominee should not wait to do this, as, at times, insurance providers reject claims that are made more than 48 hours after the policyholder’s death. The nominee needs to be quick here and initiate the process right away.
The claim can easily be filed online. The nominee needs to visit the insurance provider’s website and file the term life insurance claim. The process is very straightforward and only requires a few minutes.
You need to submit all the documents needed such as the original policy documents, the death certificate (if available), the medical records and so on. The list of documents needed is clearly mentioned on the website. The nominee needs to submit all the papers in order to smoothly and quickly receive the claim amount.
If all the documents are in place and the claim has been filed properly and on time, the insurer will hand over the cheque to the nominee. The insurer will, however, run an investigation to rule out any fraud before the cheque is handed over.
These are the simple ways in which the nominee of the policyholder can file a term insurance claim. Once you know How to File a Term Insurance Claim in the Event of Death, you need to ensure that the claim is paid.
Sadly, when the claim is to be filed, you won’t be around to help your loved ones. This is why you need to take some measures while you are alive to ensure your beneficiaries get the claim smoothly after your demise. To ensure this happens, inform them of the following and also be honest with the cover yourself:
You need to make proper declarations when you buy a term life insurance cover. This is your prerogative and you cannot avoid doing it at any cost. You need to be completely lucid and honest at this step. For instance, if you are a smoker, you need to declare it. Your premium rate will definitely go up, but your nominees will not face any problems at the time of a claim. Also, you need to be clear and truthful about your age, your health conditions, etc. Remember, the insurance provider will not simply hand over the claim amount to your family after your demise. They will run a thorough investigation first. If you were dishonest, it will be discovered and then the claim may even get rejected. To avoid such a debacle, be honest and make proper declarations without fail.
Term insurance has different types of payout options. You need to be very careful when choosing the correct payout option for your nominees. The payout options include the lump sum payout, the staggering payout and a combo of both. In the lump-sum payout, the entire death benefit is paid in one go. In the staggering payout, the sum assured is broken up in small instalments and paid over a pre-decided term. This acts as an income replacement of the policyholder. And finally, the combination of the two pays a chunk of the fund at the time of the policyholder’s death and then smaller instalments from time to time. You need to understand the financial needs of your family and also their capacity to handle finances when you choose the payout option. If your beneficiaries are financially sound and can handle a large amount of money by making investments, etc, go for the lump sum option. If you feel they cannot handle so much together and need the regular payouts, opt for the staggering option. Assess the habits and needs of your family and then choose wisely
Your nominee may be your aged mother or your minor son. They may not have any idea about how to file a term insurance claim in the event of the death of the policyholder, who is you. So educate them beforehand about the claim process, because you never know when misfortune may strike and you may end up losing your life. If you feel your nominees cannot handle the claim process, designate a trusted family member or a friend to assist them at the time of the requirement. You should ensure your nominees know what they are doing because filing an improper term insurance claim will surely lead to the claim being rejected by the insurance provider. And in most term insurance plans, the role of the agent is not present so your nominees won’t even be able to ask for help from an insurance agent.
As mentioned above, an improper claim application can lead to the rejection of the claim. Documentation is a very crucial part of filing a term insurance claim. This is why your nominees need to know where you keep the policy documents as the original policy documents will be needed at the time of filing the claim. Also, tell them about the other documents they need such as their own KYC documents, etc. When the documents are ready and in place, the term insurance claim process becomes a lot easier for the nominees of the deceased policyholder
You need to be responsible and maintain your term insurance plan with care. Never forgot to pay the yearly premiums. Unless you pay the premium on time, the plan will not stay active. Even if your plan lapses temporarily due to a missed premium payment and you happen to die in that time, your family will not even be allowed to file the term insurance claim. Try to avoid such situations by clearing your premium payments regularly and on time. If the premium is paid, your family is pretty much assured of getting the claim when needed. Fortunately, the term life insurance plans are very affordable and the premium amount is never too high. This makes it easy for you to afford the amount and make regular payments on time. Make the payments and stay secured at all times.
If these measures are taken care of, the term insurance claim will seldom get rejected. These are quite simple and easy to follow, so never skip them.
Be very careful when you choose the term insurance policy. Look for a cover that is sufficient for the financial needs of your family. Also, remember to buy the plan from an insurer who has a high claim settlement ratio. Unless the insurer pays the claims properly to others, you won’t be assured of your family getting the claim as well. So keep these factors in mind, inform your beneficiaries How to File a Term Insurance Claim in the Event of Death, and pave the way for your loved ones to receive the sum assured from the term insurance plan after your death.
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