look news india
The biggest bitter truth of life is that untoward incidents never come without warning, but in such difficult times, maintaining financial stability along with emotional shock for a family becomes the biggest challenge. It is often seen that the head of the household or the earning member has taken a life insurance policy to keep his family safe, but after his sudden death, the nominee or the family members do not know how to get the claim money from the insurance company. In those times of grief and distress, the tangle of paperwork often leaves people frustrated. Insurance Regulatory and Development Authority of India i.e. IRDAI has clear guidelines that the death claim process should be simple, transparent and time bound so that the victim’s family does not have to make unnecessary visits to offices. Immediately after the death of the policyholder, the first and mandatory task is to give formal notice of the incident to the insurance company, which in insurance parlance is called ‘Claim Intimation’. The sooner this information is given, the faster the process moves. In today’s digital era, you can directly submit information by visiting the official website of the concerned company, mobile app, toll-free helpline number or the nearest branch office. Along with this information, the policy number, full name of the policyholder, exact date, time, place and cause of death as well as the mobile number and e-mail ID of the nominee have to be entered. As soon as this information is entered, the company issues a unique ‘Claim Reference Number’, through which the entire process can be tracked.
Once the claim intimation is lodged, the insurance company issues a claim form to the nominee, which has to be filled with utmost care and necessary legal documents are attached. Any carelessness or ambiguity in the preparation of documents is the biggest cause of unnecessary delay in claim settlement. The most important document is the original ‘Death Certificate’ issued by the local Municipal Corporation, Municipality or Gram Panchayat. Apart from this, it is mandatory to submit the original documents of the policy bond, however, if the policy bond is lost then the work can be done by giving an indemnity bond. The nominee has to submit proof of his/her identity and address, for which attested copy of Aadhar Card, PAN Card, Passport or Voter ID Card can be given. Additionally, it is necessary to provide a canceled check of the bank account to which the claim amount is to be transferred or a clear copy of the first page of the bank passbook so that the money can be transferred directly into the account through NEFT. If the death occurred in a hospital due to common illness, the discharge summary, medical records, doctor’s death summary certificate and indoor case papers have to be attached. Whereas if the death has occurred due to an accident, murder, suicide or any suspicious circumstances, then it is mandatory to have the police FIR, Panchnama, postmortem report and viscera examination report (if applicable). After examining all the documents, the investigation wing of the company does physical and digital matching of the documents.
The Insurance Regulatory and Development Authority (IRDAI) has made very stringent laws to protect the rights of policyholders and their dependents, so that no insurance company can delay claims unnecessarily. As per IRDAI Master Direction, if a claim does not require any additional investigation or field verification, the insurance company must pay the claim within exactly 30 days from the date of receipt of all required documents. If the matter is sensitive and the Company has to conduct additional investigation based on suspicion, this investigation process must be completed within 90 days of receipt of the intimation, and a final decision on the claim must be taken within the next 30 days of completion of the investigation. If the insurance company fails to settle the claim within the prescribed 30-day deadline or delays the process without any solid reason, then under the regulator’s rules the company has to pay the claim amount to the nominee along with interest at 2 percent above the bank rate. Additionally, Section 45 of the Indian Insurance Act acts as a strong shield of protection for policyholders. Under this law, if 3 consecutive years have passed since a life insurance policy was issued or revived, then the insurance company cannot reject the claim on any grounds—be it misrepresentation or concealment of facts. This rule provides legal protection to millions of families across the country from arbitrary rejections.
People often complain that the insurance company did not pay the entire sum assured and deducted some money in between, or rejected the entire claim. There are many technical and financial reasons behind this which are important to understand. The first reason is the loan taken against the policy; If the policyholder had taken a personal loan against the insurance policy during his lifetime and the principal amount or interest remained outstanding, then while settling the claim, the company automatically deducts the outstanding loan and interest from the total payment amount and sends the remaining amount to the nominee’s account. The second reason is that something unexpected happens during the grace period; If the premium due date has passed and the policyholder dies during the grace period, the company pays the remaining claim by deducting the outstanding premium for that year. Additionally, if the policyholder had concealed his/her true age while filling the policy form and upon verification of documents the age is found to be higher, the company recalculates the premium as per the actual age and makes the payment after deducting the difference amount. However, in some serious circumstances the claim may be completely rejected. If at the time of taking the policy, information about any pre-existing serious or fatal disease like cancer, heart disease, kidney failure etc. is hidden and death occurs within 3 years of the policy, then the claim is rejected considering it as non-disclosure. Insurance companies also flatly refuse to pay claims in case of death due to excessive consumption of alcohol, drugs, suicide within 12 months of the inception of the policy or involvement in any illegal or criminal activity. Therefore, being transparent about every fact while taking life insurance and making a claim decides the security of the family.