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10 reasons that can reject your life insurance claim

10 reasons that can reject your life insurance claim

Life insurance is the best way to secure your loved ones financially in case of an emergency or uncertainties. But sometimes common mistakes on your part can lead to rejection of your insurance claim. It is good that you choose insurance plans that benefit in the time of need. But it is equally important to know what instances can leave space for the rejection of the insurance claim. Therefore, before selecting the Insurance policy, you should go through these 10 reasons that can reject your life insurance claim:

Providing incorrect information:

When you fill up the insurance policy form, you have to fill out all the correct details regarding you and your family members. And other details that can verify at the time of claim. If you give any misleading information (like concealing medical history) while buying an insurance policy, it could lead to the rejection of your claim.

Death by Suicide:

In suicide cases, it totally depends on the type of insurance policy. In case of linked plans, the nominee receives 100% of the policy fund value even if the policyholder commits suicide even within 12 months from the commencement of the policy. However, for non-linked plans, the nominee only gets 80% of the premium paid and not the full insurance cover in case of suicide within 12 months. Until 2014, if the insurer committed suicide within one year of the date of commencement of insurance plan then no settlement claim was provided.

Smoking after buying policy:

The life insurance premium is higher for smokers as compared to non-smokers. If the insured starts smoking after subscribing to an insurance policy, the policyholder needs to make the insurance company aware of it, which may lead to an increase in premium payment. If the insured person fails to report about his changed health-related habit in time and develops a life-threatening disease, the company can decline the claim payment.

Drunk driving:

If the insurance company finds out the insured person was driving under the influence of alcohol or drugs, which subsequently led to death, the company holds the right to reject the insurance claim.

Breaking a law:

If the policyholder dies as a result of breaking a law or involvement in a crime. The insurance company can reject the claim.

Death outside India:

If the insured plans to settle abroad, it should be notified to the insurance company. As a clause in the insurance policy says a policyholder must disclose his or her new resident country to claim settlement. Term insurance plans are valid even if you change your country of residence.

Terrorist attack:

Terrorist attacks are not covered under term insurance plans. Such claims may be settled on the humanitarian ground later when the nominee contacts the IRDA, but most insurance companies don’t provide cover against such incidents.

Natural calamities:

Deaths due to natural calamities like earthquake, flood or tsunami are not covered under basic insurance plans. However, you can choose add-on plans to cover such natural calamities.

Adventure sports:

Death resulting from participation in adventurous sports like bungee jumping, skydiving. And other outdoor sports like power-boat racing, timed motor-sport, etc, are also not covered. Death during participation in car racing or bike racing would also lead to zero payouts.

Homicide:

In case of a murder, if the insurance company finds out that the nominee is the accused. The insurance claim would be rejected or withheld until the charges are dropped or the nominee is acquitted.

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