Here's all you Need to Know about Life Insurance Claim Rejections
Most people purchase insurance plans in order to avail of life insurance maturity benefits coupled with the financial protection offered by them. Life insurance plans offer death benefits in case of any unfortunate event leading to the disability or demise of the policyholder.
However, a lot of policyholders are unaware of the fact that there are a plethora of conditions that might lead to the rejection of their life insurance maturity benefits. Therefore if you have a life insurance plan in place or if you are planning to get one it is vital to be aware of all the possibilities that may possibly lead to rejection of life insurance maturity benefits in the UAE.
Homicide of the Policyholder
When the demise of the policyholder occurs due to criminal activity that involves homicide it is very likely the claim of the insurance policy along with insurance plan maturity benefits will be rejected. There are mainly two conditions that might arise in such a scenario. Here’s a quick rundown-
Case 1: Nominee is Involved in the Homicide
The insurance provider will not settle the claim of the insurance plan in case the nominee of the policy is found guilty to be involved in the murder of the policyholder directly or indirectly. The payout will be kept on hold until the nominee is given a clean chit by the judiciary.
Case 2: If the Demise of the Policyholder occurred due to Involvement in any Criminal Activity
If during the claim investigation it turns out that the demise of the policyholder was due to involvement in any sort of criminal activity, the insurer will not settle the claim along with life insurance maturity benefit. The demise of the policyholder due to involvement in any sort of criminal activity as per the law will not qualify to receive the insurance claim or life insurance maturity benefits. However, contrary to this situation if a policyholder with a criminal record passes away due to any natural reason or medical complication from an ailment or illness the nominee will be entitled to receive the death benefit based on the plan.
Demise Occurs Under the Influence of Illicit Drugs or Alcohol
In case it is found out that the death of the policyholder occurred under the influence of alcohol or any other illicit narcotic substance, the insurer will reject the claim coupled with the life insurance maturity benefits. Moreover, at the time of issuance of the policy insurance providers enquire about the consumption of alcohol and drug use in order to evaluate the probability of death due to them. If the insurance provider comes to a conclusion where it appears that you are a heavy user you might not qualify for the plan. To avoid any hassle at the time of claim settlement or availing life insurance maturity benefits it is recommended that one should declare it correctly in the application form at the time of issuance.
Incorrect Disclosure of Smoking Habits
We all are well aware of the fact that smoking is one of the most common lifestyle habits that often lead to death or poor health. If you are a smoker it is crucial to declare the information in the policy application form at the time issuance of the time to avoid any hassle at the time of claim settlement. If the insurance provider finds out that the cause of death was smoking which was not mentioned in the policy documents the claim will be rejected. Therefore one must opt for insurance plans after going through the fine print of the plan thoroughly.
Demise due to Adventure Sports and Risky Activities
If you are actively involved in adventure sports like scuba diving, sky diving, bungee jumping, bike racing, paragliding or any other similar sport it might affect claim settlement. Policyholders at the time of issuance of the policy enquire about the frequency of involvement in such activities since they are typically not covered in case of life insurance plans. The correct approach to counter the situation is to inform the insurance provider about involvement in such activities which reduces the probability of claim rejection later.
Incorrect Disclosure of Health Conditions
The demise of the policyholder due to any existing medical condition will not be covered under the plan along with the life insurance maturity benefit. If you have any pre-existing medical condition it is vital to mention it in the application form.
Typically death due to suicide is not covered in the first year of the insurance plan, however, if it happens after one year of the purchase of the plan it will be covered. Furthermore, self-inflicted injuries might lead to rejection of the claim and the life insurance benefit as per the guidelines of the provider.
In a Nutshell
The basic thumb rule that allows buyers to identify the best life insurance plan and the provider is to assess it on the basis of the claim settlement ratio. Moreover, correct disclosure of information in the application form is vital to ensure smooth settlement of claim along with life insurance maturity benefits.