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The Long Read
Everything you *need to know* is right above this. Scroll down, only if you'd still like to read more (honestly, why?)
Yes, you do! How will your family make a claim on your life insurance if they do not even know that your term insurance policy exists? This may cause them financial distress, despite you taking the step of protecting them from such situations.
Here is why you must inform your family about your term policy:
They can claim and receive the insurance money on time
They can use the insurance money to meet their daily expenses and other major financial goals like the children's education, wedding, healthcare expenses, and so on
They can use the money to meet any immediate financial liabilities such as loan repayment and other debts
According to the IRDAI, as of March 2018, a whopping ~ ₹ 15,166 crore of insurance money has gone unclaimed.
Can you imagine how so many families cannot access the insurance money the policyholders have left for them, just because they don’t know about the policies?
Don’t be that person!
You must share all the necessary information that your family requires to be able to access your insurance amount in your absence. Some of these details are:
Name of the life insurance company
Policy information such as the insurance amount, policy duration, T&Cs (if any), additional benefits like riders, and so on
Policy documents (physical and/or digital copies)
E-insurance Account credentials
Insurance agent/broker/advisor's contact details (if any)
Terms for your policy in your will (if any)
Your term insurance nominee must also know how to make a death claim and the common mistakes to avoid to prevent a claim rejection.
Generally speaking, there are some best practices you can also adopt after buying a term insurance plan to ensure your family can claim the insurance money smoothly without any hassles.
You must keep your term insurance documents safe in such a way that your family can access them anytime they need -
Keep both physical and digital copies of your term policy
Inform them of their whereabouts. Ensure your family has access to these at all times
Keep all policy-related information in an online document on the cloud or on your computer
Sync up your DigiLocker to access the e-copy
Make sure your family knows your E-insurance Account credentials
Your family/nominees should know the steps to file a death claim on a term insurance plan:
They should inform your insurer right away about the death of the life insured aka you to expedite the process. Besides the nominee, even an assignee or a relative can do it. They can also get help from an insurance agent with the claim process in case the policy was bought from one
They must fill out the claim form carefully with all the necessary details and submit it. They must ensure they share all the information correctly and truthfully to avoid claim rejection
Secondly, there are some additional documents they have to submit like:
ID proof (both yours as well as the nominee’s)
Hospital records and discharge form (if applicable)
Postmortem report (if applicable)
The final list of documents will vary from insurer to insurer and will also depend on other factors such as what kind of riders you have added to your policy and so on. Your nominee must contact your life insurance company to know the exact requirement.
After filing the claim, the insurer will accept/reject it in
2 weeks (without any investigation requirement) or
120 days otherwise
Don’t forget to share this information with your nominee to make it easier for them during the claim process.
Good question. An E-Insurance account or eIA is an electronic repository that can be used to store and access all your insurance policy documents from multiple insurers in one place. It is free to create, reduces the hassle of paperwork and makes storing and accessing your insurance policies really easy and convenient.
Your family can access your eIA account anytime and from anywhere and find your policy documents at the time of filing a death claim, without needing to be physically available to retrieve them. They don’t have to waste time looking for physical copies of these documents and can expedite the claim settlement process.
So, don’t forget to open an E-Insurance account and be sure to share your eIA credentials with your family members.
Firstly, your nominees need to be aware of all the rules and regulations thoroughly. Every life insurance company has to have a system for policyholder services as mandated by IRDAI. The system needs to specify the following:
Service turnaround time
Claim review committee
Grievance redressal mechanism
Secondly, they need to know that after filing a claim, the insurer needs to:
reject it within 2 weeks if there is no investigation required or
resolve within 120 days in case of any investigation
If your claim is being delayed, your nominees should write to the grievance redressal officer of your insurer and request them to fast-track the process.
If your claim is being denied, here is what your nominees can do:
Approach the claim review committee of your life insurer
Submit all the claim-related details to them and get an acknowledgement of the submission
Remember, your nominee can also complain if they receive an unsatisfactory response from your insurer
Approach an insurance ombudsman if the resolution provided is unsatisfactory. An insurance ombudsman can handle claims up to ₹ 50 lakhs
Approach the IRDAI in case the resolution is still not satisfactory. The complaint should be resolved within 2 weeks
As a last resort, approach the consumer court
Yes, of course you should tell your nominees about all the life insurance policies that you have. When you pass away, your nominees may just focus on making a death claim on the most valuable policy and may lose sight of the other policies you have. You don’t want them to miss out on the payouts from the different policies, that too after paying the premiums for all for so long. Every little bit helps when it comes to your family’s future financial security.
Yes, if you have bought multiple term insurance policies from different insurers, your nominee will have to file the death claim separately for each policy.
If you have bought them from the same insurer, then depending on whether the insurer allows it, your nominee may be able to claim all the policies by filling a single form and providing just the policy numbers. But remember, if the policies have different nominees, they have to file the claims separately.
Yes, you should. If your nominees are not the final intended recipient of your term insurance payout, they can find out who it is from your Will and ensure the amount is transferred to that person.
For example, if the intended recipient is your live-in partner and you have mentioned so in your Will, but your term insurance nominee is your parent, you need to tell your parent about your Will to ensure your partner receives your policy money.
Yes, you should. If you have bought the term policy from an agent, the agent could help your nominees during the claim process.
Your family needs to know that If you have bought your term insurance policy under the Married Women Property Act (MWPA), the payout will go only to your wife and kids. No one else, not even a creditor or a relative can claim it.
They also should know that the MWPA overrides a Will, i.e. even if someone else is mentioned on the Will as the intended recipient of your life cover, the claim amount will still go to your wife and kids.
Additionally, as a good practice, tell your wife to keep her marriage certificate handy so that she may be able to produce it (if asked) during the claim process.
If you ever go missing, your family needs to file a missing FIR and if you are still missing after 7 years of doing that, then they can file a death claim.
Here are the steps they need to follow to do so:
File a missing FIR
Obtain a Non-Traceable Report from the police if you are still missing after 7 years
Submit it to get a court order
Get a death certificate issued by the court and submit it to the insurer
Your family needs to remember that your term policy premiums need to be paid till the time they can file a claim otherwise the policy can become inactive. If there is sufficient proof that you passed away many years ago, then the insurer will refund the premiums paid after the date of your actual death.