Acquiring a life insurance policy may seem like a breeze compared to the process of actually obtaining the life insurance claim settlement after its maturity. You may have come across this notion before, and to some extent, it holds true. Initially, you pay your premiums and in the unfortunate event of any mishap, you proceed to claim the insurance funds.
However, it is important to note that certain challenges may arise during the settlement of an insurance claim, which can potentially exacerbate your difficulties and compound your distress. Partly, the insurance companies work like any other business firm and will try to deny your claim or reduce your claim to half the amount.
Nevertheless, it would be unfair to solely hold the insurance company responsible for any complications in the payout of insurance claims. Occasionally, errors may also arise on our part. Thus, in this article, we have compiled a set of tips to help facilitate the smooth processing of your life insurance claim settlement. Check it out!
- Research and understand the policy before purchasing
The first and foremost step for an easy and smooth life insurance claim settlement is to be cautious when you are buying life insurance. Ensure to research the policy of various insurance companies, compare and analyze. Understand the terms and conditions, and make sure the coverage you want to include in the policy. If needed always seek assistance from a lawyer or expert. There is no rush when you decide to invest your hard-earned money in insurance for the security of your family’s future. Generally, the insurance company provides 2 weeks for you to study the contents of the policy.
- Avoid errors in your application
When you purchase life insurance, you may remember you fill out the application form where you have to enter all your details. An error in the form can subsequently lead to the insurance company rejecting the claim or stopping the signed agreement. Therefore, the insurance company can stop the collection of a life insurance policy depriving your loved ones of their rightful claim.
And this is so because, if you hide any type of information relevant to the company in said application, the insurer cannot calculate your case as a potential insured. And the data you provide in this procedure can influence the assessment of the agreement with the company.
Precisely, then, if your insurer finds out about possible errors in the application, the company could decide not to pay the claim for which you were covered. The most common errors that are found in the application forms are regarding health status. For example, the accident occurs and you file for the claim. The insurance company will then request the medical report. However, the medical report shows some pathology that you may not have indicated during the insurance contract signing. This type of blunder can seriously increase the chances of rejecting your claim by the insurance company.
Errors in the documentation may indeed be due to bad practice on the part of the seller or your own oversight. But it is very important to take the utmost care when signing the life insurance application. Otherwise, the insurer may doubt your word.
- Carefully understand the exclusion in your insurance policy
Another reason why life insurance may not cover your claim may be exclusions. Not every event is supported by the insurance company. The supported coverage depends on what you have included in your policy. For example, if you have included an accident or illness as coverage and paid the premium, in the occurrence of these events, the insurance company will settle your claim. Therefore, exclusions are one of the factors that make the difference between one policy and another. So you must know them and choose those that cover your possible risks and, effectively, will protect you and your family.
After all, it is important that you pay attention to the exclusions in the contract that will allow your loved ones to always get paid, no matter what.
- Make sure to keep your policy active
For you or your beneficiary to receive the insurance claim, you as an insured party must make sure that the policy remains active till its maturity or till the occurrence of any unfortunate event. It means you must pay the monthly premium on time. You cannot stop the payment or be arrears in its payments else the insurance policy will be null and void. In a void state, the insurance company has the right to reject the request for a claim according to the condition of the policy.
- Ensure the insurance waiting period is passed
Usually, some types of insurance have a waiting period. The waiting period is a period where insurance is not yet active to reduce cases of pre-existing conditions or cases of people who were already sick before being insured. This waiting period generally applies to health insurance and life insurance.
For example, you buy life insurance on January 1 2022 and the waiting period is 3 months. Then your insurance policy will be activated only from April 1, 2022. The 3-month time will be the waiting period. Until this time passes, you cannot claim for the insurance. So when submitting a claim, you need to verify whether the waiting period for your insurance has been completed or not.
- Share your insurance information with your family
The purpose of buying a life insurance policy is to ensure your family’s financial security and stability in your absence. If you forgot to tell them about your policy, your dependents won’t be able to file a claim in case of any urgency. Therefore, inform your family members about all the details of your policy. Explain to them about the coverage, premiums, terms, and conditions, and teach them the process of making a claim after the maturity of the policy or in case of the occurrence of any unfortunate events.
Also, keep all the documents related to your policy in one file. This way, your family members will have access to all required documents when requesting a claim.
- Make sure the location of the incident is in the insurance service area
Not all insurance policies can cover all regions or countries. If you experience risks outside the scope of the insurance service area, then you may not necessarily be able to submit a claim. For example, you have life insurance in Nepal, but you die while in Malaysia. If your life insurance service only covers Nepal, then your beneficiary cannot submit an insurance claim.
- Prepare all your documents
In order to ensure a seamless and smooth insurance claim process, you need to possess all the necessary documents at hand. Presenting all the required documents readily will certainly mitigate the risk of the insurance company denying or delaying your request for the insurance claim. The documents you need to present when making a life insurance claim are:
- Death certificate
- Notice of death of the insured (place of death, time, and cause of death)
- Certificate proving kinship
- Notice of claim on the part of the beneficiaries
- Official identification like citizenship
- Identification of beneficiaries like citizenship or national identity card
- Marriage certificate (in case the beneficiary is the spouse)
- Medical bills and certificates in case of death by illness
- Medical attendants report in case of death by accident
- If you want the payment to be made to a bank account, verify that it is current and that all details are correct.
Go to the field office or service center for the insurance company with all the documentation to start the process of an insurance claim. Once notified, and taking all the necessary documents, the insurance company will verify the information and shall determine the circumstances of the death. From that moment on, the company will make compensation within a period of 30 calendar days, approximately. Check to see if the policy has the option of advance payment for funeral expenses. We recommend that you submit the documents and get a receipt, and the folio of income or number of a claim, so that you have evidence and follow-up.
- Be aware of the deadline for filing the claim
You may not know but there is a time limit declared in the insurance policy to file for the insurance claim. The time limit for filing the claim can vary from one insurance company to another. Therefore, it is imperative that you read and understand the policy carefully and inform your beneficiary as to when to file the claim. Normally, the insurance company gives 60 to 90 days to file the claim in case of death or any other events covered by the policy. Still, it is wise to file the claim as soon as possible. If you miss the deadline for filing the claim, you will be allowing the company to decline your request for the claim. If you have any doubts regarding the time limit or any other terms mentioned in the policy it is always advisable to consult the expert or insurance lawyer.
- Constantly monitor the evaluation process of the insurance company
After claiming the insurance, the next step for you is to constantly monitor the evaluation process of the insurance company. You need to keep communicating with the company and fasten the process of evaluation so you can receive your claim as soon as possible. Generally, after you submit the documents, the company will verify your information, and conduct an investigation itself. The representative of the company can interview with the witness, or with a medical attendant, may review the medical history and records of the insured person, and so on. The company will then proceed to decide whether to accept your claim or deny your request.
Normally, the insurance company will take from 15 days to a month to conclude its process but some may take longer time depending upon the complexity and amount of your case. Therefore, you should always maintain communication with the insurance company. Monitor its evaluation process and find out about the status of your request.
- If a claim is denied…
After requesting your claim, what if the insurance company denies your claim? First, you should understand why the company has denied your claim. The insurance company will surely explain it you the reason for their denial. There can be many reasons for such action. Such as
- lack of necessary documents,
- failure on your part or the insured person’s part to disclose important information in the application form
- Death of the insured during the waiting period of the policy
- Exclusion of coverage for certain events of death
You should carefully go through the reason and consult the expert or the lawyer. Present the required documents, make your case strong, and as a beneficiary appeal to the court against the insurance company’s decision.
- If a beneficiary dies….
Failure to receive the insurance claim is not the only problem. Another problem lies in the allocation of insurance claims to the intended beneficiary. The individual specified as the beneficiary or dependent in the policy is the person whom the policyholder desires to receive the insurance money. However, what happens if the beneficiary passes away? In the event of the insured person’s death, prompt action is taken by all parties involved. Yet, when the beneficiary dies, people often neglect the necessary steps to ensure a smooth transition. Consequently, the funds may not reach the intended recipient in need.
Therefore, it is vital to promptly take the required steps for changing the beneficiary in the event of their demise. Failing to make this adjustment leaves a possibility that the insurance money may fall into the hands of an undesired recipient, contrary to the wishes of the policyholder. Likewise, if both the beneficiary and policyholder pass away, it is the beneficiary’s legal heirs who will equally receive the insurance claim.
Receiving the insurance claim smoothly is the right of every beneficiary. Yet partly due to the failure of compliance with the formalities from the beneficiary or policyholder and partly due to the insurance companies being the business firms seeking to gain profit, people often don’t get the insurance claim timely. It is one of the reasons why people hesitate to buy the insurance policy. However, if you follow the tips that we have mentioned here, it will be much easier for you to collect your rightful claim.