One of the main reasons why people are hesitant to buy life insurance in India is because some are cheap Death suit Field payments. There is nothing far from the truth. In life insurance the claim payment is very high and many regulatory provisions confirm this.
In 2019-20, more than 1.8 million death claims were filed in India. Fewer than 14,000 claims — some of which were paid — were rejected. There are no exceptions to life insurance except suicide within the first year of purchase. This is not always the case. About 15 years ago, it was routine for life insurance companies to exclude death for some reason and early insurance period. This provision is now repealed in all products. The only thing buyers should be aware of is the difference between life and personal accident insurance. Both pay a sum upon death; In life insurance, death can be caused by any cause, and personal accident insurance only covers accidental death. Personal accident insurance includes various exemptions such as death due to hazardous activities or drugs. However, these exceptions are not allowed in life insurance.
In a life insurance claim, you must confirm that the insured has died and that the death certificate is the primary document.
Claims can be rejected if the buyer hides the information while filling out the proposal form. This is not uncommon and, in general, hidden information is related to health and other insurance that a person has already purchased. Insurance Insurance requires these two bits of information to write correctly. Negative health implies short longevity and high amounts of insurance are the agenda for insurance companies to consider. Recent court rulings, including by the Supreme Court, have made it clear that non-disclosure of physical information when purchasing insurance is a reason for a lawsuit to be dropped.
However, denials on non-disclosure grounds are further complicated by the fact that there is a relatively new provision in the law that a life insurance claim cannot be denied three years after the policy has come into force. The rationale is that death occurs within three years if not intentionally disclosed, which can be investigated. These terms ensure that life insurance death claims are paid. This 3 year rule is a strong incentive to buy life insurance early, as claim rejections can be very difficult over time.
Not only are claims paid, there are rules to ensure they are paid fast. According to the Policy Holder Interest 2017 regulations, in death claims, all documentation requirements must be increased 15 simultaneously rather than in pieces. Also, a decision on the claim, if an investigation is required, must be made within 90 days of the information being given. Payments must be made within 30 days of the decision. In case of delay, insurers will have to pay 2% interest above the current bank rate. Today it is 7%. Interest insurance companies that pay due to settlement delay and claim settlement periods are reported to their boards and policyholder protection committees and actively discussed. 99% of claims pending as on 31st March 2020 are less than 6 months pending. And in most cases the reason for the delay was that not all the details asked by the claimants were sent.
After you buy life insurance, you should renew it every year for the term you have chosen even if your health is worse. There is a grace period of 30 days after the renewal date to make your payment, except for monthly payments where the grace period is 15 days. If you do not renew on time, your insurance will be lost. During the first six months of a deficiency, insurance companies will usually put your insurance back in place with a statement of good health upon your request. However, after six months, they may refuse to renew or charge you more.
The bottom line is that you should buy term insurance as soon as possible when you start working, without worrying about a claim settlement. And then renew your insurance on time every year.
Kapil Mehta is the Co-Founder and Chief Executive Officer of Secure Now Insurance Broker Pvt. Ltd.