The death of a loved one is an emotionally draining experience. If it happens to be an earning member, it has an impact on the family’s finances, as well.
While life insurance is meant exactly for such a case, one needs to follow certain steps to make hassle-free claims.
What is a death claim?
It is a formal request made by the beneficiary of a life insurance policy to an insurer, seeking payment of the life cover amount on the death of the insured.
Intimate and submit documents
First of all, intimate the insurer about the death of the insured at the earliest. The insurer usually responds by asking for documentary evidence. Documents such as death certificates are a must for death claims. However, in these times some insurers like LIC are also allowing submission of hospital and cremation records of death, as documentary evidence, if it has occurred in a hospital. So, check with your insurer on this.
Following are the documents required by the insurer
- Filled-up Death claim form
- Original Death certificate from the local municipal authority
- Original policy document
- Copy of claimant’s identity proof (photo and residential)
- Copy of bank account proofs (Cancelled cheque)
If the death has occurred due to non-accidental death, then additional documents will be required
- Medico-legal cause of death certificate
- Medical records (Admission notes, discharge/death summary, test reports etc)
- Medical attendant’s/hospital certificate to be filled by the treating doctor
- Employer certificate (for salaried individuals)
And in case of accidental death,
- FIR/panchnama/police inquest report and post-mortem report in case of accidental death or suicide
- Copy of driving license, if the insured was driving the vehicle at the time of the accident
What’s the usual time frame for claim settlement?
Insurers classify claims into two types – early and non-early claims. Early claims are those triggered within three years of the policy commencement, while non-early claims happen after three years. All non-early claims are usually settled within 10 working days, while early claims may take 45 days or even more.
As per IRDA regulations, settlement or repudiation of claim should happen within 30 days of receiving all documentary evidence, unless the case requires an investigation. In case of an investigation, the settlement process could take up to a maximum of 120 days.
Who can make a claim?
Nominee(s), guardian (in case of the minor nominee), assignee (person to whom the policy rights have been transferred) can make a claim. If there are no nominees or the nominee is dead, then the proof of legal title to the claim proceeds should be made by submission of proof of title/succession certificate (given by a competent Court).
What if the policy document is lost?
In case of loss of policy document, the nominee has to submit an indemnity bond – that indemnifies the insurer against any loss on account of third-party claims.
How is the rider claim processed?
If rider claims, like accidental death benefit is part of the policy, then it can be claimed by submitting FIR, post-mortem and related documents.
What types of deaths are not covered?
- Death due to natural calamities like earthquake or floods
- Death due to accident unless covered in a rider. However, if the policyholder was intoxicated or engaged in adventure sports activities at the time of the accident, the claim will be rejected.
- Death due to suicide. Policyholder committing suicide within a year of buying the policy will result in rejection of the claim. However, the nominees are entitled to receiving at least 80% of premiums paid in such cases.
- Death due to illness. Insurers can also reject claims if the insured did not disclose some critical health conditions or harmful habits like smoking.
- Death due to pregnancy complications.
Can you change the payout option?
Usually, insurers don’t change the payout option chosen at the time of buying the policy. However, some allow the beneficiary to alter it – especially if it is from an income to a lumpsum payout option. It has to be specified in the claim form and sometimes the beneficiary also gets an option to seek one year’s income in advance to tide over the financial crisis.