Term life insurance, also called a term life policy, is a type of life insurance policy that provides coverage for a specific period of time. The term insurance policies provide death benefits and beneficiaries if the death of the injured day after the policy term during this period.
Suppose an individual bought a term insurance policy at the age of 30 which will provide coverage to that person for the next 20 years if the person dies within that term period of 20 years then his beneficiaries will get that person’s death benefit. But if the person dies after 20 years or after the term period of 20 years then no death benefits will be provided.
Term Life Insurance provides protection to your family from any unfortunate event. It was taken to protest this. This gives them a financial safety net. This provides them with a safety protection that helps them during any emergency or crisis, but what if they don’t have that safety protection meaning what if their claims were rejected?
Getting a term insurance claim rejection is a very disturbing and pathetic event that occurs when the family is already under emotional stress. Getting rejection of the insurance claim adds up a financial stress along with the emotional stress if the policyholder was the family’s bread and butter earner. This is the reason why policy holder along with their family should know the reason for their term insurance rejection.
Let’s learn about the top reasons why term insurance claim gets rejected.
What Are The Reasons For Term Insurance Claim Rejection?
If you are applying for the term insurance claim but if it gets rejected then there could be many reasons and we will know about them one by one.
Providing Inaccurate Information
The first reason for term insurance claim rejection could be providing inaccurate or misleading information. Before buying a term insurance plan insurance company asks you an application form. The form basically asks about your basic details such as:
- Your Name
- Gender
- Age
- Your Occupation
- Annual Income
- Any Pre-Existing Health Condition (like- diabetes hypertension or any heart condition)
- Your Lifestyle habits like how much do you intake alcohol or smoke.
It’s your responsibility that you have to fill all the details with responsibility and accuracy which means filling all the details should be correct without any misleading or inaccurate claims. You should have to keep everything transparent and have to maintain this transparency with the insurance company.
But if do not maintain this transparency and hide the facts from your term insurance company then there are high possibility that your term insurance claim will get rejected in the future this is because in the policy form, any kind of misrepresentation is considered fraud. So if you don’t want to get caught in then you are advised to fill all your details 100% accurately with full honesty.
For example, if an individual is filling out a term insurance policy form and he is a smoker but in his application form he told that he is a non smoker, and if in future if it is found that the individual’s death is caused because of smoking related disease or problem then his beneficiaries and a term insurance claim will get rejected because he hid his smoking habit.
Therefore it is very important that if you are filling a term insurance policy and do not want your insurance claim to get rejected then it is very essential that while filling out the term insurance form you provide all the details correctly and with honesty.
Hiding Second Insurance Policy
Second most common reason for your term insurance policy rejection could be that you have purchased more than one life insurance plans but never disclosed the details about these other policies in the term plan this could be done knowingly or unknowingly but this could cost in your term insurance claim rejection.
Therefore it is always advised that before purchasing a term insurance plan you should disclose all your insurance policy plans else you could also face claim rejections.
Contestability Period
So what is a contestability period? Most of the insurance companies keep this policy under contestability clause according to this if the policy holder dies just a few weeks or months after buying the term insurance plan then this could result in insurance claim rejection.
The contestability period get started right after when you purchase your term insurance plan and this contestability period could last for about 12 to 24 months.
Now coming towards the last case of policy claim rejection.
Death From Excluded Reasons From Policy
The last case where the term insurance policy claim could be rejected is when the death of the policy holder is due to the reasons that are excluded from the policy. The main reason for term insurance policy claim rejection is when the insurance claim is demanded for that reason which is listed specifically listed in the term insurance policy exclusion list. Some of the reasons may include:
- Intentionally harming the policy holder leading to their death for the policy claim
- Death of the policy holder because of their undisclosed health conditions or due to any undisclosed injuries.
- Death of the policy holder due of taking part in adventure sports activities like racing, paragliding, sky diving, bungee jumping, or rafting.
- Death of the policy holder because of their drugs or alcohol addiction.
- Death of the policy holder because of their undisclosed pregnancy report or because of child delivering complications.
If these were the reasons for the death of the policy holder then there are high possibility that your term insurance claim will most probably will get rejected.
How To Avoid Term Insurance Claim Rejections
Getting your term insurance claim rejected could be disastrous and disheartening for the policy holder and their family but you can avoid this situations if you follow the following:
- Make sure that your beneficiaries know everything about the term insurance claim process including the necessary documents required for the claim.
- Make sure that while filling out the term insurance policy form you provide all the important details 100% correctly and with full honesty
- Make sure you provide the nominee’s details before purchasing the term plan, and if you ever wanted to update the nominee’s details then do it ASAP.
