A life insurance policy assumes great importance as it offers risk cover on the life of the individual being covered in the policy. It may be the only source of income to the beneficiary on the death of the policyholder. For this reason, settlement of claims in a life insurance policy becomes critical.
There are different forms of claims which can be initiated in a life insurance policy and procedure and mode of these claims differ from one case to another. Given below are the various forms of claims in different situations:
When the policy holder dies during the tenure of the policy, the nominee / beneficiary is eligible to receive the sum insured benefits. This constitutes a death claim. The beneficiary should first and foremost inform the insurance company of the death and give the necessary proofs in writing. The place, date and cause of death should be clearly mentioned.
The claimant would need to submit documents such as filled up claim form, death certificate, policy document, medical discharge papers, age proof, certificate stating the cause of death and claimant’s identity proofs. If the death is categorised as an early death (death occurring within 3 years of policy commencement), then the beneficiary should submit additional documents like hospital papers, employer forms etc.
Early death claims are usually scrutinized with greater detail as they are most often associated with cases of fraud. If the death is caused due to unnatural reasons, a FIR report and a post mortem report should be submitted, if applicable. It is always advisable to submit all documents and the claim form at the earliest possible time after the occurrence of the death.
A maturity claim arises when the life policy has run its entire term and the policy holder has survived the policy tenure. This type of claim arises in the case of money back or endowment or unit linked policies, as a pure term policy does not carry maturity benefit.
Usually, the insurance company sends an intimation of the maturing policy about 2 or 3 months before the maturity. On maturity, the policy holder should submit the original policy document to the insurance company’s branch along with the policy discharge form, a cancelled cheque or NEFT form.
This should bear the account number of the policy holder in which the maturity proceeds should be credited. Along with this, a rupee 1/- revenue stamp should be affixed across which the policy holder should sign.
If all forms and documents are in order, the claim proceeds will usually be credited directly to the policy holder’s bank account. If the policy has been assigned to any third party, then the maturity proceeds is paid to the assignee only.
Claims on accidents
In some cases, life insurance policies come attached with a rider which compensates the policy holder in case death or disability owing to an accident. The benefit paid is usually more than the basic sum insured, due to the presence of the accidental rider. The rider comes at an extra cost and the policy holder is required to pay additional premium towards this.
In case there is a claim on accident, the beneficiary (in case of death of policy holder) or the policy holder himself (in case of disability) is required to produce proof of the accident to the satisfaction of the insurance company. A total or permanent disability due to accident allows a waiver of future premiums by policy holder.
Usually documents such as FIR and post mortem report are made compulsory in addition to other documents under normal death cases.
Claims when the policy holder disappears
There are many cases when a policy holder goes missing. This status affects all forms of life insurance – those with survival benefits, maturity benefits and / or death benefits. The law presumes death of an individual if he is missing for more than 7 years, provided the court orders the presumption of death.
When a person disappears, the nominee / beneficiary should inform the life insurance company in addition to reporting to the police. If the policy holder continues to be missing for 7 years, the beneficiary should apply to the court for presumption of death. When the court orders this, a death claim can be submitted to the insurance company.
Survival benefits or maturity benefits (if any) arising during the interim period of 7 years will also be settled by the insurance company based on the court’s order. However, for all this to work, the nominee / beneficiary should continue making premium payments to keep the policy in force.
The process of initiating the life insurance claim varies with the type of policy and the insurance company. It would therefore always be advisable to contact the insurance company or your policy agent and ask them what is required at that time to initiate the claim.
As processes and requirements change over time, contacting the insurance company first will help you avoid unnecessary wastage of time and efforts.