A person
opts to take an insurance policy for protection and security of finance when it
is needed the most. There are a number of insurance plans like Term Insurance,
Whole life policy, Endowment, ULIP and money back plan from which a person can
choose which ones to buy depending on his current and future financial needs.
For e.g. A
person may opt for a Term Insurance plan to safeguard his future financial need
in case of sudden death or he might opt for a pension plan to get regular
income after retirement.
Insurance
need varies from one individual to another. ULIP plans have gained a lot of
significance among younger generation because it involves insurance plus
returns on investments made in shares, bonds, etc. Parents may opt to invest in
child plans in order to safeguard the future of their children like education
needs; marriage needs etc. Thus, it becomes critical for the insured to
understand the claim process in order to gain benefits from life insurance
policies.
Understanding Life Insurance Claims –
There two
types of Insurance claims are contestable and non-contestable. Let us
understand them better:
Contestable claim -
A contestable claim refers to
where the life policy is less than 2yrs when the insured dies. Here the
insurance company has every right to investigate the validity of the original
application for any reason the policy was not issued. If a valid reason is found,
then the policy will be canceled and the premium paid is refunded with no
payment of death benefit.
Non-Contestable claim –
Under this the claim cannot be
investigated by the insurer because the policy is 2yrs old. Here the claim will
not be paid immediately but after specific documentations are submitted by the
beneficiary.
What can delay a life insurance
claim?
Claim
process might get delayed if there are no supporting documents needed or when
someone goes missing, or there is no death certificate.
How to make an Insurance claim?
One of the
most important services that life
insurance companies can provide to its customers is the claim settlement.
Following are some of the points that are important while claiming an Insurance
policy –
1) A person needs to fill up a claim form and
contact their financial advisor from whom the policy is bought.
2) Inform the Insurance Company in writing
with complete details of the policy and also a copy of the policy for better
clarity.
3) Need to submit the photocopies of all the
documents needed like Death Certificate, Medical reports, Police FIR, reports
of illness, etc.
4) It is also important to intimate the
beneficiary about the existence of the life cover with the benefits and help
them in claiming the insurance cover.
How is the Life Insurance proceeds received
after claimant?
Life
Insurance proceeds are often paid in lump sum cash. The majority of
beneficiaries opt for this option to understand where the money was spent or
invested. Also, when the proceeds are paid in lump-sum, there is no Income tax
levied on the claim money.
Another way
of receiving the claim would be through a settlement option. There are a number
of settlement options available to the beneficiary. A settlement option comes
into light when a recipient is unable to handle the lump-sum amount, or the
policyholder himself has chosen a settlement option at the time of purchasing
the policy.
Thus, when a
subscriber buys an insurance cover, it is imperative to keep in mind the
following points –
1) To know his financial needs to understand which
policy to buy.
2) To Understand the claim process
3) To identify and educate his beneficiaries
the process of how to make an insurance claim
4) To educate and understand the process of
receiving the claimant.
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