Life insurance is a unique contract. The insurer and insured get into a contract based on good faith that what insured has declared is true and a promise that the insurer would pay the claim in the future. However, there are some conditions inherent in this contract. The one critical for ensuring a claim (due to the death of the insured) is honoured by the insurer, is the information provided by the insured at the proposal stage. "Wrong information or truth withheld by consumers may make the contract void — making the consumer lose the benefits of that policy." This puts the onus, largely, on the insured to ensure a hassle free on-time claim settlement.
While filling up the form, make sure to disclose all medical facts, correct occupation, and income. Correct date of birth along with valid age proof is necessary, for incorrect date of birth may lead to loss of full or partial claim benefits.
One must never be in a wrong notion that the insurer would not know about a fraud or an information which is kept hidden. The insurance companies have quite robust system of investigating claims. Professional third party investigators are hired to dig out the truth. Not only will you lose all the premiums paid, you would risk the financial security of the dependents that you leave behind after you are gone.
According to Life Insurance Council, the following process is critical to make sure that a claim is honoured by a company and settled in minimum time possible.
Claim intimation/ notification: The claimant must submit the written intimation as soon as possible to enable the insurance company to initiate the claim processing. The claim intimation should consist of basic information such as policy number, name of the insured, date of death, cause of death, place of death, name of the claimant.
The claimant can also get a claim intimation/notification form from the nearest local branch office of the insurance company or their insurance advisor/agent.
Documents required: The claimant will be required to provide a claimant's statement, original policy document, death certificate, police FIR and post mortem exam report (for accidental death), certificate and records from the treating doctor/hospital (for death due to illness) and advance discharge form for claim processing. Based on the sum at risk, cause of death and policy duration, insurance companies may also request some additional documents.
Submission of required documents: A life insurer will not be able to take a decision until all the requirements are complete. Once all relevant documents, records and forms have been submitted, the life insurer can take a decision about the claim.
Settlement of claim: As per the regulation 8 of the IRDA (policy holder's interest) Regulations, 2002, the insurer is required to settle a claim within 30 days of receipt of all documents including clarification sought by the insurer. However, the insurance company can set a practice of settling the claim even earlier. If the claim requires further investigation, the insurer has to complete its procedures within six months from receiving the written intimation.