Investing in a life insurance policy aims to protect your loved ones financially during unforeseen events. Before buying life insurance, you must find a good insurer with a high claim settlement ratio.
Life insurance claims settlement is one of the essential services of an insurance company. Additionally, it is an obligatory service. Most companies have a convenient claim settlement process, which is completed when the beneficiary or nominee of the policy receives the payout in their bank account.
Many beneficiaries wonder if there is a time limit to make a death insurance claim, but there isn’t. Instead, there is a time limit by which insurance companies must settle the claim.
In this article, let us understand the timeline for settling a life insurance claim and the factors affecting it.
What is a Life Insurance Claim?
A life insurance policy is a financial agreement between a policyholder and an insurer. The insurer guarantees to pay the policyholder’s family a predetermined amount of money in case the insured passes away while the policy is active.
An insurance claim is a notification to the insurance company to reimburse against losses covered in the policy. It offers financial relief during unfortunate events like accidents, medical emergencies, death, etc.
You must contact the insurer to start a claim settlement in life insurance. Attach the required documents for verification with your claim form.
Life Insurance Claim Settlement - Legal Limit and Death Claim
The Insurance Regulatory and Development Authority of India (IRDAI) mandates insurance companies to settle death claims within 30 days. The guideline applies to all cases where no investigation into the death is required. If there is an investigation, the timeline extends to a maximum of 120 days.
The time limit begins after the family raises the claim request and provides all the necessary documents related to the death insurance claim.
In case the insurance provider fails to adhere to the time limit, it must pay an interest on the claim amount for the delayed period.
Claim Guarantee1 on Life Insurance Plans
Apart from the time limit set by the regulatory body, some life insurance policies offer claim guarantees. The feature promises a voluntary claim assurance from the insurer.
Claim guarantee brings down the time limit for settlement to 24 hours from 30 days. This is a preferred timeline for all policies by all policyholders. However, depending on the case, the claim can require additional time. The maximum time limit for settlement then increases to five working days, especially if the claim amount is high.
The time tracker for the death claim process starts running after the documents are submitted to the insurer.
Factors Affecting the Timing of Life Insurance Claim Payout
When you buy a life insurance policy, you evaluate its type, features, and benefits to pick one that suits your needs. You may also add riders# and select a suitable payout option to ensure that it is convenient for your beneficiary.
Life insurance will give your family the claim benefit if you pass away. However, some complications can delay the settlement. You must learn of these complications and how your family can avoid them.
False declarations in the proposal form
While purchasing a life insurance policy, the policyholder has to provide personal details and medical history in a proposal form. The insurer cannot deny a claim if your policy has been active for three years continuously. But, in the event of an early death, before completing three years, insurers can investigate the cause of death.
Any discrepancy found in the proposal form during the investigation can result in claim disputes and delays. Thus, always make accurate and complete declarations.
Documents submitted for claim initiation
The death claim process starts after the nominee submits the claim form and other relevant documents. If the documents are missing or the details do not match, your family’s claim can be rejected.
Check the list of required documents while purchasing the insurance policy. Keep the policy bond and other related documents together to make it easier for your nominee.
Accurate beneficiary information
The details of the beneficiary must be up-to-date. For instance, if your nominee’s address has changed three years after you purchased the insurance policy, please inform the insurance provider. Making sure that the information is not outdated or inaccurate helps expedite the process.
Policy exclusions
Insurance does not provide coverage for some situations. Generally, life insurance does not apply to suicidal deaths within the first year of the policy term. The death claim gets rejected in such cases. Similarly, there are exclusions for riders. Remember to read the exclusions carefully to avoid last-minute surprises.
Final Thoughts
The claim settlement in life insurance takes anywhere between two weeks to two months, provided all the necessary documents are submitted. Claim guarantee for online life insurance plans assures a death benefit payout within 24 hours. The delay or denial of life insurance claims in most cases is due to a lack of proper documentation or an incorrect death claim process.
TATA AIA offers life insurance plans with a four-hour express claim settlement benefit. Moreover, with the Easy Claim Initiative, the claim filing process becomes hassle-free when a Rakshakarta agent arrives at your doorstep.
