When you start earning, your main priority would be the financial safety of your loved ones, especially in your absence. You might think that building a corpus purely on savings might help in achieving that goal. But that could be a mistake. Your savings alone might not help your family survive financially in your absence.
You should go for term insurance plans, which provide financial coverage to you and your loved ones from life risks. And it ensures your family is sufficiently compensated in the event of an unfortunate circumstance. To get this compensation, however, your nominee would need to file a claim. While your insurer might explain them the process, your nominee would want the process to be quick and less complicated. Here is how they can ensure that.
What is term insurance?
Term insurance is a type of life insurance policy which provides financial coverage for a specified term. For example, if you purchase one of the term insurance plans with a period of 20 years, the plan will provide protection to you and your loved ones for that duration. If something unfortunate were to happen to you during that duration, your family would be compensated with a death benefit. This amount is based on the plan you purchase.
What is a term insurance claim?
When you purchase term insurance, you are required to nominate someone as your nominee. This could be your child, your partner, or another person of your preference. If something unfortunate happens to you, the nominee is required to file a claim. This claim ensures that your beneficiaries are compensated by the insurer. The sum assured given in the policy is based on the policy you purchase. This amount is given in the form of a death benefit. Read the policy document carefully to see which conditions are eligible for claim.
How to ensure a smooth claim process?
Your sudden passing away can be painful for your loved ones. However, when you purchase the policy, you can educate your nominee on they can ensure a hassle-free claim process to get the compensation without any delays. Here are some of the tips you can keep in mind:
- Check the claim settlement ratio
The importance of the insurer’s claim settlement ratio (CSR) cannot be emphasised more. It is the ratio of claims filed vs the number of claims processed by the insurer. If your insurer has a higher CSR, that is a positive sign that your claim processing would not be delayed. However, a lower CSR means slow processing on the part of the insurer.
- Read the policy document
When you purchase the policy, it is always advised to read the policy document carefully. Most of the time, policyholders do not do this and face complications in the future. Reading the policy will give you a better understanding of the inclusions and exclusions of the claim process.
- Do not falsify information
The responsibility of filing the claim falls on the shoulders of your nominee. It is important to educate them about your medical history, especially if you have a pre-existing medical condition. Oftentimes, policyholders do not disclose this information at the time of purchase. This can cause problems for them at the time of filing the claim. If you have disclosed these details at the time of purchase, it would cause fewer complications.
- Ensure timely filing of the claim
Each insurance provides a window within which your nominee is required to file the claim. Any delay can cause the claim to be rejected. Also, if the insurer delays in either accepting or rejecting your claim, they are liable to compensate you for this delay. You should educate your nominee about their rights.
Benefits of term insurance
The following are the benefits of term insurance:
- Overall financial protection for you and your loved ones from life risks
- Add-ons such as accidental death benefit, disability benefit, critical illness benefit, and premium waiver can be added to enhance the coverage
- Term insurance has tax benefit under Section 80C of the Income Tax Act. Premiums of up to Rs.1.5 Lakhs are eligible for tax deduction under Section 80C of the income tax act
- Death benefit is eligible for tax deduction under Section 10(10D) of the income tax act
The tips mentioned above can ensure that your nominee does not face a complicated term insurance claim process. Use the term insurance premium calculator if you are looking to purchase term insurance for yourself and your loved ones.
Insurance is the subject matter of solicitation. For more details on benefits, exclusions, limitations, terms, and conditions, please read the sales brochure/policy wording carefully before concluding a sale.