Planning to buy an insurance policy? Know what leads to rejection of a claim!
05 Feb 2019
Sometimes, the insurance claim gets rejected, resulting in extreme financial distress to the insured or the dependent family members.
Filing the insurance claim late can lead to a rejection.
Insurance offers financial protection during an adverse situation. Health insurance provides financial protection including hospitalization expenses to the insured, while life insurance gives financial security to the dependent family members on the demise of the insured. Getting the claim on time is very crucial. Sometimes, the insurance claim gets rejected, resulting in extreme financial distress to the insured or the dependent family members. So you must know about the things that may lead to the rejection of your insurance claim. Let’s check out the important causes for a claim rejection.
Furnishing wrong information while applying for insurance
Whether you apply for life or health insurance, the insurance company determines the premium based on the information provided by you. Sometimes, people furnish wrong details to lower the premium amount. Later, if the insurance company detects such a discrepancy, then it may reject the claim due to the incorrect information provided by you. It is essential to fill the insurance details carefully and provide the right information. Don’t leave any point blank: if the information asked is not relevant, then write down ‘NA’ or put a cross sign. After completing the form, take a photocopy for your record.
Lapse of Insurance policy
You are eligible to get a claim only during the policy period, i.e., when you have paid the premium within the due date. If the premium is not paid on time, then the policy lapses, and the insurance cover ceases to give you protection. Always pay the insurance premium on time. You can set a reminder or auto bill pay to avoid overseeing the due date. Usually, insurance companies allow a grace period of 15 days for premium payments in case you missed the due date.
Not giving details of pre-existing diseases
Under the health insurance policy, pre-existing diseases are often covered after the lapse of the prescribed waiting period, i.e., 3 or 4 years as per the policy clause. If you don’t mention about pre-existing ailments at the time of application and make a claim within or after the prescribed waiting period, then the insurance company can reject the claim request citing non-disclosure of material fact.
If the insurance company gives the option of providing a health check-up report while applying for the insurance policy, then you should undergo all the prescribed tests and submit the true report. It is better to have the application rejected at an initial stage due to pre-existing diseases, than getting your claim rejected during a medical emergency.
Not providing complete information
Concealing or not providing complete information can result in claim rejections or a delay in settlement. For example, you should give the right information related to your income if applying for life insurance, as the insurance company determines the permissible cover size based on that figure. If you smoke or drink, then mention it correctly in the application. If you have already taken a life insurance policy from other company, then furnish the details in the form. Similarly, you should provide correct details for your height, weight, age, address, etc.
Filing the claim late
Filing the insurance claim late can lead to a rejection. Life insurance companies usually conduct an immediate survey to collect the correct information related to the demise of the insured. Claim delays can make the insurance company get suspicious about fraud. Similarly, health insurance companies usually need to be informed within 48 hours of hospitalization for getting a timely claim; otherwise the settlement may get delayed unnecessarily. If you are going for a planned hospitalization, then you may request the health insurance company to pre-approve the claim. This will help reduce the chances of claim rejection.
(The writer is CEO, BankBazaar.com)
(Disclaimer: These are the author’s views. Readers are advised to consult their financial advisor before buying any plan)