Types of Term Insurance Claims You Should Know

Term insurance is one of the simplest and most affordable forms of life insurance. It provides financial security to your loved ones by offering a death benefit in case of the policyholder’s demise during the policy term. When it comes to claims, understanding the different types can help policyholders and beneficiaries navigate the process more efficiently. Here’s a detailed overview of the types of term insurance claims and their significance.

1. Death Claim

A death claim is the most common type of claim in term insurance. It is filed when the policyholder passes away during the term of the policy. The insurer pays the sum assured to the nominee or beneficiary mentioned in the policy.

Key Points:

• The beneficiary needs to submit the claim form along with the death certificate, policy document, and other supporting documents.
• Some insurers offer an accelerated claim process for death due to specific causes like accidents or critical illnesses.

2. Maturity Claim (Return of Premium Plans)

Traditional term insurance policies do not have a maturity benefit, but some plans, like Term Insurance with Return of Premium (TROP), offer a maturity claim. If the policyholder survives the policy term, the premiums paid are returned to the policyholder.

Key Points:

• This type of claim applies only to policies with a maturity benefit clause.
• No additional benefits like bonuses are included; only the premiums paid are refunded.

3. Rider Claim

Many term insurance policies come with optional riders that provide additional coverage. Rider claims can be filed if the insured event under the rider occurs. Common riders include:

• Accidental Death Rider: Provides an extra sum assured in case of death due to an accident.
• Critical Illness Rider: Offers a lump sum if the policyholder is diagnosed with a critical illness like cancer or heart attack.
• Waiver of Premium Rider: Waives off future premiums if the policyholder becomes disabled or critically ill.

Key Points:

• Each rider has specific terms and conditions that must be met to file a claim.
• Supporting documents like medical reports or FIR (in case of an accident) may be required.

4. Partial or Advance Claim

Advance or partial claims are applicable in scenarios where the insurer allows partial payouts in cases of terminal illnesses. This enables policyholders to access a portion of the sum assured during their lifetime to cover medical expenses.

Key Points:

• Available only for terminal illnesses specified in the policy document.
• The remaining sum assured is paid to the beneficiary after the policyholder’s demise.

5. Suicide Claim

Term insurance policies typically have a suicide exclusion clause for the initial 12 months. However, after this period, claims arising from suicide may be considered valid, and the insurer might pay the nominee an amount based on the terms specified in the policy.

Key Points:

• The claim may include the return of premiums paid, excluding any applicable charges.
• It is crucial to check the policy’s specific suicide clause.

6. Group Term Insurance Claim

Group term insurance is offered by employers or organizations to their employees or members. Claims under group term insurance are handled slightly differently, as the policy is owned by the employer or organization.

Key Points:

• The nominee needs to contact the employer or organization for claim initiation.
• Documents like the death certificate and identity proof of the nominee are required.

FAQs

1. How long does it take for an insurer to settle a term insurance claim?
Most insurers settle claims within 30 days of receiving all required documents. In cases requiring further investigation, it may take up to 90 days.

2. What documents are required for a death claim?
Typically, you need the claim form, death certificate, original policy document, ID proof of the nominee, and medical records or an FIR (if applicable).

3. Can a claim be rejected?
Yes, claims can be rejected if the policyholder provided false information during the application process or if the claim falls under excluded scenarios (e.g., death due to criminal activities).

4. Are suicide claims covered?
Suicide claims are generally not covered in the first 12 months of the policy. After this period, they may be considered based on the policy terms.

5. What happens if there are multiple nominees?
The sum assured is divided among the nominees in the proportion specified in the policy. If no proportion is specified, the amount is divided equally.

6. Can a term insurance claim be filed online?
Yes, most insurers provide online claim submission options for ease and efficiency. Ensure you upload all the necessary documents.

7. Is accidental death covered under all term insurance policies?
Accidental death is covered under the basic term insurance plan, but an additional payout may require an Accidental Death Rider.

Disclaimer:
This article is for informational purposes only. Please read your policy document carefully and consult with your insurance provider or financial advisor for personalized advice regarding term insurance claims.