Insurance claims are the moment of truth for the insured. A claim can be demanded in an insurance contract when the insured suffers an event that the policy covers. The claim processing or claim settlement process will start with the insured or their nominees filing the claim with the insurer.
Every insurance claim is guided and limited by the terms and conditions of the policy covering the contingency. Life insurance claims and health insurance claims processes differ a lot.
Where a health insurance claim may be cashless, a life insurance claim has to follow a long process and thorough verification.
What is an Insurance Claim?
An insurance claim is a formal request to the insurance company, in writing, for the amount assured on the occurrence of an event as specified in the insurance policy. An insurance claim is a compensation against losses covered under your insurance policy. As an insured or as a nominee you are entitled to claim because of the premiums paid to the insurer in line with the terms and conditions of the policy document.
Insurance is a financial agreement in which you pay a fixed premium and in return, the insurer provides financial cover for losses incurred. In the case of life insurance, the loss of income due to untimely demise is considered a loss for the grieving family and is compensated to the extent of the sum assured. The objective of the “claim process” is to inform the insurance company that the event for which the insurance cover was offered has occurred and that the assured amount should be disbursed.
How does an Insurance Claim Work?
An insurance claim helps you avail the support of the insurer against the insurance policy you had purchased. For example, if you have bought a health insurance policy, you can file a claim with the insurer against the policy to:
i. Reimburse the hospitalisation expenses
ii. Provide cashless service at the hospital of your admission
Similarly, life insurance claims can help your family avail the financial support you planned with the insurance policy. They can simply file a claim with the insurer with all the relevant documents and receive the policy benefit.
What is the Process for an Insurance Claim?
Insurance claims across the policies follow a similar process, except for a few steps where claim processing can be faster. The usual procedure includes the following:
a) Report the unfortunate event to the insurer. The event should be the one covered in the policy. For example, death cannot be reported to a health insurer.
b) Receive and file the claim form along with all the relevant documents.
c) Submit the supporting documents to strengthen your claim.
d) The insurer will review the documents and process the claim – Approve, reject or demand additional documents.
e) If the claim is approved the insurer pays the benefits offered in the policy.
f) The claim settlement may include a lump sum payment or regular income or a mix of both as selected by the policyholder in the policy.
Claim processing time for each insurance company may vary. Life insurance claims may take anywhere from one working day to 30 days to process. On the other hand, motor and health policies may process the claim in real-time, i.e., with the bill generation. Real-time claim processing is more popularly known as cashless claim settlement.
The insured or nominees do not need to file claim forms or bill copies with the insurer. You also, spend only your part of the bill and the insurer pays its part directly to the vendor or hospital.
Documents Required for Claim Processing
In the case of life insurance, the nominee should register by submitting a death claim form along with identity and address proofs at the nearest branch. Once the claim is registered, the insurer would require a physician’s statement along with certificates from all the hospitals where the insured was treated for the illness that ultimately caused his/her death. A certificate from the insured person’s employer may also be asked for.
The following documents along with your claim form, are mandatory for filing a death claim:
a) Original policy documents
b) Original/attested copy of death certificate issued by the local municipal authority
c) Death claim application form (Form C)
d) NEFT mandate form attested by bank authorities along with a cancelled cheque or bank account passbook
e) Nominee's photo identity proof such as a copy of Passport, PAN card, Voter identity card, Aadhar (UID) card, etc.
You may have to submit additional documents related to the cause of death. For health or Mediclaim policies, the identity and address proofs of the insured have to be submitted along with copies of investigation reports, discharge summary, claim form and hospital certificate.
How to Check a Life Insurer’s Claim Experience?
Customer-friendly companies that intend to settle genuine claims will have straightforward, transparent processes that respond to enquiries and grievances within reasonable turnaround times.
A numerical method to evaluate a claim experience is to look at the claim settlement ratio. For example, at Canara HSBC Life Insurance, this ratio currently stands at 98.57% for the FY 2021-22.
How to Avoid Life Insurance Claim Rejection?
Here are a few pointers to keep in mind to avoid rejection of claims:
1. Don’t Sign Up in a Haste
As the adage goes, “Buy a life insurance when you don’t need it; because when you need it, you may not get one.” You may opt for a life insurance policy during your heydays. However, if you have signed up in haste without applying your mind, the deal may cost you dearly when you or your family need the money the most.
It is imperative to read all the terms and conditions especially related to exclusions of various causes of death. Although the cause of death is unpredictable, too many rigid clauses may preclude your family from staking a claim.
2. Don’t Conceal Information
On the other hand, you must also provide accurate details and disclose all information in utmost honesty and sincerity while availing yourself of a life insurance policy. A small non-disclosure can work against you if the insurance company attributes this event of the past to the cause of its demise.
3. Pay Premiums on Time
Life insurance premiums can be paid in yearly, half-yearly, quarterly or monthly frequencies. It is natural to miss payments in the routine humdrum of life. But non-payment of premiums will nullify the policy and make it inactive. There could be grace periods or options to revive policies within some stipulated time frame.
Any mishap that occurs when the policy is inactive may not be covered by the insurer. Moreover, if the policy lapses for non-payment of dues, all premiums paid till that date would be wasted.
4. Nominee Details
Although the insurer would ask you to enter nominee details, you must ensure that accurate details are entered. The name and contact details of the nominee should match with some legally valid identification proof. Updating nominee details whenever there is a change can reduce the burden on the family in case the need for a claim arises.
5. Form Filling
Convenience should not lure you to allow the salesperson or anyone else to fill the form on your behalf. When you give details to someone, there is always a possibility of a loss of data during transmission. One small error can cost you and your family very dearly.
6. Say “Yes” to All Medical Tests
Several good reasons to make good use of the medical tests prescribed by the prospective insurer. The insurance company bears expenses incurred in these medical check-ups. Make use of this opportunity to assess your health. As the insurer is getting the tests done, they cannot cite the current health condition as a reason to reject the claim at a later date.
Learn if you can buy a life insurance policy without a medical exam in India.
Life Insurance Claim Vs Other Insurance Claim
Within life insurance, claims can be of two types, one, when the policy is maturing, the insurance company notifies the policyholder through an intimation letter and/or an email at least a couple of months before the date of maturity.
The policyholder will then have to fill out some forms including a wire-transfer form so that the maturity amount is directly transferred to the specified bank account. In case of claims arising out of the death of the insured, the nominee will have to send the claim form along with requisite documents.
|Life Insurance||Other Insurance|
|1. Fixed sum as a death/terminal / critical illness benefit||1. Asset and health (Mediclaim) insurance|
|2. May also offer maturity or survival benefit||2. The total available sum is capped as Sum Insured|
|3. Can also grow your money (investment option)||3. Covers major part of the incurred cost or loss|
|4. Nominees can file the claim after your death||4. The benefit is usually payable to the policyholder or the service provider (hospital, service centre, etc.)|
|5. Benefit payment does not depend on the cost incurred||5. Insurance may also compensate third parties affected by your actions/accident|
Mediclaim works a little differently. The insured can opt for cashless payments when hospitalization is pre-planned so that the process of paying and then claiming is simplified. The insurance company does due diligence of the treatment basis the details provided by the hospital and pays directly to the hospital.
Motor insurance covers both the damage claim for the insured vehicle as well as a third-party claim where someone else is injured or his/her property damaged. Motor insurance claims may need copies of police complaints, reports by surveyors etc. to be enclosed along with the claim form.
Insurance policies are a “must-have” and there is no second thought to it. However, when you select a policy from a plethora of options, look at something that will give you peace of mind. Your family should not feel stressed out at the time of claim, should that need arise. A high claim settlement ratio is an indicator of strong underwriting guidelines and exemplary customer focus.Disclaimer: This article is issued in the general public interest and meant for general information purposes only. Readers are advised to exercise their caution and not to rely on the contents of the article as conclusive in nature. Readers should research further or consult an expert in this regard.