Getting insurance companies to pay claims is the hard part at times. Though the claims ratio of most insurance companies is 94-98 per cent, claimants often have to run pillar to post to get these. There are various reasons due to which claims can be rejected. Among these is a delay on the part of the claimant.
Under the Limitation Act, a claimant has to tell the company about the death in three years. The company can refuse to pay the claim if told beyond this period. But, in case of genuine reasons, the company has to pay.
According to Frederick D'souza, senior vice-president, underwriting, HDFC Life, policies that cover the risk of death do not have a specific provision for the period for making a claim and, hence, the period of three years from death as provided in the law is applicable.
If companies receive claim requests long after the policyholder's death, insurers will ascertain the reasons. Says Ravi Kutumbarao, head, claims, Bajaj Allianz Life Insurance, "We ask for the reasons for the delay and since we cannot corroborate these, we may accept these at face value.''
At times, companies may decide to investigate further as to why filing a claim was delayed. According to Deepak Yohannan, chief executive, MyInsuranceClub.com, usually companies check with neighbours or the hospital before paying. "It may happen that the deceased had a pre-existing ailment not disclosed while applying for the policy. So, the company will do its investigation.''
Another reason companies refuse claims is due to exclusions. Certain situations or ailments are excluded and mentioned separately in the policy document. "The company may make an independent investigation to check facts and determine that the claim does not fall in any exclusions, by the policy provisions,'' D'Souza says.
Prakash Praharaj, of Max Secure Financial Planners says sometimes people buy more than one or two policies and don't inform their family members about all. So, the beneficiaries may not know that a certain policy exists.
Another situation where delayed claim is permitted is when the dead are missing or non-traceable, says Praharaj. By law, a missing person is declared dead only after seven years. So, the beneficiaries can make the claim after seven years. But they must provide all relevant documents like copies of the police complaints and police verification report.
Keep a few things in mind. A person who makes claims on your behalf 20 years from now may not know the details of your policy. Make it easy by listing key information about all your policies, with policy number, policy document and so on. Riders must be mentioned separately.
Mention all your current situations when taking a policy. That will go a long way in making the claims process easier.