Such a situation is already an ordeal staring at a family. Rejection of a term insurance claim could prove detrimental from the family’s perspective and, therefore, one is best advised to avoid making mistakes and err on the side of caution when purchasing term insurances.
Five howlers that usually invite rejections of life insurance claims made by nominees are:
· Casual Approach
Purchasing a term plan is an important financial decision, so the last thing an individual needs would be a casual or carefree approach. One is best advised not to pay heed to unprofessional advice coming from different quarters, including relatives, friends, and insurance agents. Studying the plan you seek to purchase is essential and then you can jot down a concise list of your insurance needs and reconcile them with the insurance plan.
· Furnishing incorrect details
Furnishing wrong information in your term policy application will invariably lead to a rejection of your claim. Your family may end up paying a heavy price for reasons as silly as minor errors during the filling of the application form and furnishing of wrong details to the insurance company.
· Avoiding health checkups
Regular health checkups are essential as any prevarication of your latest health information, knowingly or unknowingly, during the purchase of the policy could lead to rejection of the claim. In case an insurer finds out that you concealed any detail while buying a term insurance policy, the claim will in all probability get rejected. Therefore, regular health check-ups are essential toward avoiding such complications.
· Letting your policy lapse
Some may think that letting a term insurance plan lapse is not a big deal. However, a lapsed policy is the most common reason for insurance claims getting rejected. In general, insurance companies allow policyholders to restore lapsed plans retrospectively. Therefore, one is best advised to leverage such policies and reinstate the insurance. The above notwithstanding, the policy cannot be reinstated if it has lapsed, owing to nonpayment of premium.
· Hiding details of old insurance plans
Insurers need details of other insurance plans held by an individual. Considering this information unimportant is not a smart decision. Nondisclosure of old insurance policies may result in claim rejection.