CHAPTER 16

PAYMENTS UNDER A LIFE INSURANCE POLICY

Claims :

A claim is a demand that the insurer should make good the promise specified in the contract.

  1. A) Types of claims and claims procedure :-

1) Survival claim – claims payable even when the life inured is alive.

2) Death claim – claims payable on the death of the life assured.

A Claim event is said to have occurred when:

i) For survival claim the event has to be occurred as per stipulated conditions.

ii) Maturity claim & money back claims are given based on determined dates.

iii) Surrender value are claims to be given based on decision taken by insured.

iv) Critical illness claims are processed based on medical and other records

provided.

Payments to be done during the policy term:-

i) Survival benefits payment – payments made at regular intervals by insurer at specified time during the policy term.

ii) Surrender of policy – the voluntary decision taken by the policy holder to stop the policy contract. The amount payable to insured is surrender value.

iii) Rider benefit – a payment done by insurer on occurrence of specified event according to terms and conditions. The policy continues even after the rider benefit payment is done.

iv) Maturity claim – a payment done by insurer at the end of the policy term, if the insured survives the entire term of the policy. The insurance contract comes to an end after maturity claim is paid.

v) Death claim – if the insured expires during the term of the policy, accidentally or otherwise, then the insurer pays the sum assured, bonus, etc. to nominee; assignee or legal heir. Such payments are known as death claim. Contract comes to an end.

Death claim can be-

a) Early death claim – claim that arises within 3yrs from start of policy.

b) Non-early death claim – claim that arises after 3yrs from start of policy.

Forms to be submitted by nominee; assignee or legal heir on death are claim form;

certificate of burial or cremation; treating physicians certificate; hospitals certificate;

employers certificate; certified court copies of police reports in case of accidental

death; death certificate issued by municipal authority.

B) Repudiation of death claim – if it is detected by insurer that the proposer had made any incorrect statements or had suppressed material facts relevant to policy, the contract becomes void. All benefits under the policy are forfeited.

C) Indisputability clause – a policy which has been in force for 2yrs cannot be disputed on the ground of incorrect or false information. The insurer will have to prove in order to repudiate a policy after 2yr period.

D) Presumption of death – the Indian evidence act 1872 deals with presumption of death; under this act if an individual has not been heard off or seen for 7yrs then they are presumed to be dead. It is necessary that premiums should be paid till the court decrees presumption of death.

E) Claim procedure for life insurance policy

It is included in the IRDA (protection of policy holder‟s interests) regulation 2002.

Insurer will call upon the primary documents which are normally required.

Any query or requirement of additional documents are to be asked within 15days.

A claim is to be paid or be disputed giving all relevant reasons within 30days.

In case of any dispute over the claim, it shall initiate and complete within 6months from the time lodging the claim.

Claim is ready for payment but cannot be done due to lack of proper identification, the life insurer shall hold such amount and shall earn interest as per schedule banks saving accounts rate (effective from 30days following the submission of all papers and information).

on delay of payment of claim on its completion would earn an interest of 2% above the prevalent rate of interest.

F) Role of agent

An agent shall render all possible service to the nominee, legal heir or the beneficiary in filling up the claim form accurately and assist in submission of these at insurer‟s office. Apart from discharging obligations, goodwill is generated from such a situation where by there exist sample opportunity for the agent to procure business or referrals in future.

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