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Types Of Claims In Life Insurance

The only person in a family who brings in money will often worry a lot about what will happen to the family if something unfortunate happens to them. Life cover is a great way to get rid of this worry. It is designed such that when a person who is insured is no more, their family gets money as a lump sum or in installment payments. But for the nominee or beneficiary to get this money from a term insurance policy, they must make a claim. We’ll talk about the different types of life insurance claims here today.

What is a claim?

Every type of life cover offers some unique benefits. Customers choose which of these benefits they want, based on their needs. A policyholder buys a life insurance policy for a certain amount of time and pays premiums during that time. Their family can use the policy’s benefits if the insured passes away during the policy term.

Types of Claims

The claims for each benefit are different. It depends on what kind of insurance the person bought. Some life insurance policies, for example, only offer a death benefit, while others provide a death benefit with a maturity benefit. The benefits obtained from riders depend on whether or not the policyholder added any rider premiums to the policy. It’s important to remember that claims can only be made based on the benefits opted for by the policyholder.

  1. Death benefit claim: The main goal of life insurance is to protect the policyholder’s family financially if the insured breathes their last during the policy term. So, a death benefit in life insurance is the amount of the sum assured that the insured’s nominee is entitled to get when the policyholder passes away during the policy’s term. After filing a death claim, the family can get the full death benefit in one lump sum or smaller amounts over time. It would depend on what the policyholder chose as the payment mode.
  2. Maturity benefit claim: If the policyholder lives until the end of the policy, then the insured won’t get any maturity benefit. However, suppose the policyholder chooses a term plan with a return of premium feature. In that case, they can get their paid premiums back as maturity benefits if they live beyond the end of the policy term. However, for the maturity benefit to be paid out, all premiums must have been paid on time in the past by the insured.
  3. Rider benefit claim: Riders are extra benefits that can be bought with an insurance policy. Insurance companies offer several riders, and adding them to the policy, increases the premium cost. But these riders are helpful, and if you choose them wisely, they can be financially helpful to the insured as well as their family. The claims for the rider-benefits have to be made separately altogether. The time to make this claim depends on the nature of the rider.

Documents needed for claims

The following documents are required to file different types of life insurance claims:

  • Death certificate of the policyholder if the nominee wants to claim a death benefit.
  • A copy of the medical record for a rider benefit that can only be claimed if the policyholder has taken a critical illness or accidental cover rider
  • The original insurance policy (for all types of claims)
  • The copy of any post-mortem reports, if done
  • The identity proof of the person making a claim
  • The address proof of the person making a claim
  • The duly filled claim forms.
  • A copy of a cancelled cheque of the nominee’s bank account where the assured sum should be deposited.

How Are Claims Settled?

Claim settlement usually takes place in three steps, which are:

  1. Using the claim forms to tell the insurance company about the claim. It should be done as soon as possible, and the claim form should be filled out correctly. Many times, these details include information about the policy and the policyholder (if the nominee is making a claim). When claiming death benefits, you should also have details like the place, time, and cause of death.
  2. After letting the insurance company know, the next step is to send in all the documents the insurance company asks for. These documents must be real because the claim process only starts once they have all been checked. If there are mistakes in the documents, the claim can be turned down immediately.
  3. The last step is up to the insurance company, which must pay out the claim within one month after the documents have been checked.

Not insured?

The above mentioned types of claims would have given you a fair idea of the benefits offered by life insurance. If you aren’t insured, a life insurance calculator can help. It will provide you with estimated premium amounts of plans you like. Tax deductions are also available depending on the plan, whether the old/new tax regime is followed, and various other factors.