As a responsible member of your family, you have purchased a term insurance policy to ensure the financial stability of your loved ones in your absence. This type of life insurance pays the plan benefits to your nominees in case of an unfortunate event during the policy duration.
Term plans are pure life covers without any investments or savings component. The entire premium is used towards the mortality charges. It is an affordable way to avail of a higher sum assured (SA). Most term plans have no maturity benefits if you survive the policy tenure.
When you have term life insurance, you are assured that your family will receive the benefits in your absence. However, here are five mistakes you must avoid to ensure smooth approval of your nominees’ claim.
Providing inaccurate information at the time of purchase
While filling in the details, ensure information like name, age, employment, income, lifestyle, qualifications, and previous policies is accurate. These factors play an important role in determining the premium. Any wrong information is construed as fraud and affects the claim made by your nominees.
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Often, you may rely on the agent to submit the details to avert the cumbersomeness of the exercise. However, you should fill the form correctly and ensure that there are no discrepancies. Doing this gives you the opportunity to understand all the terms and conditions of the policy and choose a life insurance term plan that suits your family’s requirements.
Withholding pre-existing diseases (PEDs)
It is mandatory to provide all relevant information related to PEDs, previous medical history, and surgeries at the time of buying a term plan. Moreover, if you invest in an online term plan, you must give correct information about your lifestyle-related habits like smoking and alcohol consumption. The insurer needs to take these factors into account to calculate the premium on the selected term policy.
Therefore, do not withhold any important information. Additionally, you must provide the medical history of your family, such as heart conditions, cancer, hypertension, or hereditary conditions to ensure that the claim is not rejected in the future.
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Not updating nominee details
Insurance companies pay the benefits to your nominees if an unforeseen event occurs during the term plan’s duration. Therefore, keeping the nominee details up-to-date is essential to make sure that the claim is not rejected in the future.
If you buy the term insurance plan when you are young, you may make your parents your nominees. You may later forget to update the nominee details. Therefore, if your parents and you are absent, your spouse and children may face difficulties in receiving the benefits, as did not change the nominee details.
You must choose your nominees in a wise manner. It is advisable to keep your parents as nominees when you are single. However, when you are married nominating your spouse is prudent. If you choose a minor nominee, you need to furnish the guardian’s information to the insurer.
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Failing to pay the premium
Insurers will settle claims only for active policies. If you fail to pay the premium on, before the renewal date, or within the grace period, the policy will lapse. You may revive the lapsed policy by paying the penalty. However, if you fail to do so, your family’s claim will be rejected due to the non-payment of a timely premium.
Not disclosing details of other policies
When you avail of a term plan, you must provide information on other existing policies. Often, this may be avoided, as you may find it tedious, and maybe lazy to search for the details and fill in the necessary information. Non-disclosure of these details may result in the rejection of nominees’ claim.
Under Section 45 of the Insurance Act, insurers cannot reject claims after three years from the date of purchase for any reason. However, it is recommended that you refrain from committing these errors to ensure that your dear ones do not face any hassles when you are not there for them while claiming your term insurance plan.
