How to make insurance claim experience hassle-free

Hassle-free claim experience is central to the insurance promise. A claim, however, arises only in case the conditions for it, such as death or permanent disability, occur. Such conditions are outlined in the insurance contract.

Either-way, the environment in which a claim is made is usually one of grief and sadness. While there is no way to compensate such loss, a claim at least cushions the financial fallout on the family arising from the death or disability of the life insured.
This acquires greater importance in those cases where the life insured was the sole breadwinner. The importance of swift, easy and hassle-free claim settlement experience cannot be understated in such circumstances.

The foundation for a hassle-free claim experience, however, is laid not at the time of claim, but at the time of policy purchase itself. It is advisable to look at claim settlement ratios of insurance companies whose products you are considering.

A high claim settlement ratio usually indicates better process efficiencies and careful due diligence by the insurer; and, for the claimants, it means lesser possibility of claim rejection and disappointment. To ensure that your claim experience is hassle-free, rain check on the following:

1. Understand the plan you intend to buy and benefits thereof. 

2. Make complete and correct disclosures of your age, health, medical problems / treatments taken at any point in time, family history, occupation, income, habits, so on. That is, truthfully and comprehensively answer all questions asked in the proposal form.

3. Read policy contract terms and conditions carefully and understand them well. When in doubt, seek clarifications. Every insurance company offers a free-look period of 15 days to cancel / alter the policy contract if you find the contract to be different from what you had understood it to be. Avail of this facility if you so desire.

4. Ensure that correct nominations are made in the policy. Also ensure that the nominee is aware of the policy contract and your details in full. Claim requirements are mentioned in every policy contract and it is important that the nominee is aware of the same.

5. Submit all claim documents in an orderly and timely manner to the insurance company with details in the claim intimation form filled accurately and truthfully.

Non-disclosures, partial disclosures and / or wrongful disclosures of significant and material facts are important reasons for rejection of claims. Where such information comes to the knowledge of the insurer, the claim gets rejected as per the contractual terms and conditions. When a claim is rejected on sound grounds, there is often little room for appeal.

The three most common reasons why claims are repudiated are:

1. Non-disclosures of major ailments by life insured at proposal stage - that is, heart, kidney, lung, liver or brain ailments, cancer, HIV, major surgeries, so on.

2. Non-disclosure of material medical facts such as high levels of diabetes, hypertension, respiratory issues, smoking and alcohol habits.

3. Non-disclosure or improper disclosure regarding existing insurance policies, income, nature of occupation and age at the proposal stage. This could lead to over-insurance of a person and his / her worth after death becomes higher than during his / her life time, which is a moral hazard.

If insurers discover contradicting facts after the issuance of policy contracts, they normally communicate and re-engage with the customer. Besides, they re-underwrite the case and arrive at an appropriate decision in light of fresh facts. On rare occasions, if the non-disclosure is very significant and risk cannot be accepted, the policy contract could also get cancelled.

In the ultimate analysis, these proactive steps help the insured’s family to avoid problems at the time of claims. Further, insurance companies also train their sales people with live case studies to sensitise them to the importance of swift and timely claim settlement.

It must be understood that insurance is a contract based on the principle of uberimae fides or utmost good faith and underwriting decisions are based on the faith that the disclosures made by the customer are fully and completely true.

Selective disclosures or non-disclosures affect underwriting decisions. It not only undermines the very basis of the insurance contract but also alters the risks the insurer assumes on its books. There are occasions when the nominees appeal that it is not their fault that facts were not shared or mis-stated, but unfortunately the insurer may not be able to help much at this stage. It is important that the proposer, who is responsible to provide correct facts in the first place, bear these important aspects in mind, to ensure that his kin have a swift claim experience.

The writer is executive VP & head, distribution and strategic initiatives,  Kotak  Mahindra Old Mutual Life Insurance