Life insurance is a financial cover for the risks related to human life. Human life is subject to the risk of death and disability due to natural and accidental reasons. When a human life is lost or a person is disabled permanently, the entire family of the deceased is affected not only mentally but also financially as there will be a loss of income to the household.
Almost all of us have life insurances because we all have loved ones whose lives are important to us. So when a time comes when one of our family members dies the life insurance companies become a saviour by helping the family of the deceased by way of hassle-free claim settlement procedure. Making a claim at that time can be difficult but nowadays the claim procedure is very easy and simple to understand and all of us should be aware of it in order to get the settlement of claim done in a convenient way. So here is a simplified claim procedure for making a life insurance claim –
Life insurance claims are made under two circumstances:
- Death of the life insured
- Maturity of the life insurance policy
When a person with a life insurance policy dies, then a death claim is to be made. The assignee or nominee under the policy can do this. And any close relative or the agent who handles the policy can also make a claim. The process of making life insurance claims in case of death is
- Intimation to the life insurance company
inform your insurer as soon as possible with details such as place of death, time of death and cause of death. You can inform the insurance company by calling on their toll-free numbers or by visiting their branch office or by emailing them. Now one can also make an online claim.
- Submission of documents
The insurer would need the following documents as proof:
- Filled-up claim form (provided by the insurance company)
- Certificate of death
- Policy document
- Deeds of assignments/ re-assignments if any
- Legal evidence of title, if the policy is not assigned or nominated
- Form of discharge executed and signed by the witness
Other documents such as medical attendant’s certificate, hospital certificate, employer’s certificate, police inquest report, post-mortem report etc. could be called for, as applicable.
- Claim Review
The insurer then scrutinizes the claim details and the documents submitted. They also inform if there are any documents pending. After scrutinizing the documents and information the insurer then makes the decision to accept or reject the claim. If the claim is accepted then the next step would be claim settlement and if it is rejected then the reasons for rejection are given to the claimant. Major reasons for rejection are non-fulfillment of policy term and conditions and non-disclosures.
- Claim settlement
In the last step of claim, procedure payment is made to the nominee/title holder of the claim in case the claim is accepted.
Maturity claim arises when the policy matures. When a policy matures the life insured himself gets the maturity amount. The procedure of maturity claim is the simplest of all claims.
Where a life insurance policy is maturing, the insurance company will usually send intimation to the policyholder along with a discharge voucher at least two to three months in advance of the date of maturity giving details like the maturity amount payable. The policyholder has to sign the discharge voucher – which is like a receipt – have his signature witnessed and send it back to the insurance company along with the original policy bond to enable it to make the payment. The money is usually paid out before the maturity date once the policy discharge paper is duly filled and submitted long before the date of maturity. Normally, the insurance company would send you the claim form well in advance of the policy maturing.
If the policy has been assigned in favour of any other person or entity – like a housing loan company – the claim amount will be paid only to the assignee who will give the discharge.
Claim settlement Ratio
Claim settlement ratios can be helpful to know about the insurance companies. This ratio tells about the insurers who are reliable in settlement of claims who are unable to do the same
Claim Settlement Ratio = Total Claims Approved (paid to nominees)/ Total Claims Received by the Company
So Claim Settlement Ratio is the total number of death claims approved by an insurance company, divided by the total no. of death claims received by the insurance company. It is generally measured for a period of one financial year.
High claim settlement ratio shows the insurer is reliable and could be trusted for taking term plans whereas the low ratio indicates that the credibility of an insurer is less and therefore they won’t attract many customers because of their inability to settle claims.
The following is the claim settlement ratio of term insurance providers for the financial year 2015-16.
“Based on IRDA Annual Report 2015-16 on Business Revenue of Insurers”