Getting life insurance policy is one of the most significant decisions you make in your life, knowing the process of making a life insurance claim is equally important. Being well versed of your insurance details and How To Make A Life Insurance Claim go hand in hand. Information about both these aspects of insurance makes your purchase solid and sound.
What Is an Insurance Claim?
An insurance claim is a formal request by a policyholder to an insurance company for coverage or compensation for a covered loss or policy event. The insurance company validates the claim (or denies the claim). If it is approved, the insurance company will issue payment to the insured or an approved interested party on behalf of the insured.
Insurance claims cover everything from death benefits on life insurance policies to routine and comprehensive medical exams. In some cases, a third-party is able to file claims on behalf of the insured person. However, in the majority of cases, only the person(s) listed on the policy is entitled to claim payments.
What Is Life Insurance Claims?
Life insurance claims require the submission of a claim form, a death certificate, and oftentimes the original policy. The process, especially for large face value policies, may require in-depth examination by the carrier to ensure that the death of the insured did not fall under a contract exclusion, such as suicide (usually excluded for the first few years after policy inception) or death resulting from a criminal act.
Generally, the process takes approximately 30 to 60 days without extenuating circumstances, affording beneficiaries the financial wherewithal to replace the income of the deceased or simply cover the burden of final expenses.
How an Insurance Claim Works
A paid insurance claim serves to indemnify a policyholder against financial loss. An individual or group pays premiums as consideration for the completion of an insurance contract between the insured party and an insurance carrier. The most common insurance claims involve costs for medical goods and services, physical damage, loss of life, and liability for the ownership of dwellings (homeowners, landlords, and renters) and liability resulting from the operation of automobiles.
For property and causality insurance policies, regardless of the scope of an accident or who was at fault, the number of insurance claims you file has a direct impact on the rate you pay to gain coverage (typically through installment payments called insurance premiums). The greater the number of claims that are filed by a policyholder, the greater the likelihood of a rate hike. In some cases, it’s possible if you file too many claims that the insurance company may decide to deny you coverage.
If the claim is being filed based on the damage to property that you caused, your rates will almost surely rise. On the other hand, if you aren’t at fault, your rates may or may not increase. For example, getting hit from behind when your car is parked or having siding blow off your house during a storm are both events that are clearly not the result of the policyholder.
However, mitigating circumstances, such as the number of previous claims you have filed, the number of speeding tickets you have received, the frequency of natural disasters in your area (earthquakes, hurricanes, floods) and even a low credit rating can all cause your rates to go up, even if the latest claim was made for damage you didn’t cause.
When it comes to insurance rate increases, not all claims are created equal. Dog bites, slip-and-fall personal injury claims, water damage, and mold can all act as signals of future liability for an insurer. These items tend to have a negative impact on your rates and on your insurer’s willingness to continue providing coverage. Surprisingly, speeding tickets may not cause a rate hike at all. At least for your first speeding ticket, many companies will not increase your prices. The same goes for a minor automobile accident or a small claim against your homeowner’s insurance policy.
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How To Make A Life Insurance Claim
If you are undecided whether to buy insurance or not, consider the number of earning members in your family and if you are the sole supporter, it is of utmost importance that you buy an insurance policy to secure the future of your family members. If you are a first time buyer and don’t know what kind of insurance to buy, then a term plan will be the most cost efficient and hassle free way to get you started.
After getting an insurance policy there are two things that you must do –
1) Know the process of making a claim for your life insurance policy.
2) Educate your family members about the process of making a claim if they ever need to.
Here are three simple steps to understand the process of making a life insurance claim
Step 1: Fill up the claim form. This can be downloaded from the insurer’s website or collected from the agent or the insurer’s office. The claim form will capture the following details –
- Policy Number (A policy number is a unique identifier that attaches a policy to a specific individual)
- Date and time of death of the policy holder
- Cause of death
- Name of the nominee
- Bank account details of any other policies that were held by the policyholder
Step 2: While submitting your insurance claim form you need to attach the following supporting documents
- Original policy papers
- Death certificate of the policy holder (medical death summary in case of death due to an illness)
- In case of an accidental death, you need to attach the first information report (FIR) and a post-mortem report. The nominee of the life insurance policy would also be required to submit know-your-customers (KYC) details to the insurer which is an important, globally developed step to prevent identity theft, financial fraud and money laundering.
Step 3: Keep in mind while claiming your insurance that the regulator will insist that claims be settled within 30 days of receipt of all the relevant documents by the insurance company, so be prepared in advance with the necessary documentation. If dissatisfied with the documents provided to the insurer, you can ask for clarifications or supporting evidence for the same.