Life Insurance Claim Settlement

Life insurance claim settlement is a process where the claimant/beneficiary can make a request to the policyholder's insurance company to avail the death benefits under the life insurance policy of the insured in case of the policyholder’s death. With this, the claimant/beneficiary can file a claim request for critical/terminal illness, accidental death benefit, accidental total/permanent disability if required.

Claim Settlement Ratio of Life Insurance Companies in India

Following is the list of claim settlement ratio of the best life insurance companies in India:

Life Insurance Company

Claim Settlement Ratio (2019-20)

No. of Claims Paid 2019-20

Max Life Insurance

99.22%

15342

HDFC Life Insurance

99.07%

12509

Tata AIA Life Insurance

99.06%

2954

Dhfl Pramerica Life Insurance

98.42%

560

Exide Life Insurance

98.15%

3404

Reliance Life Insurance

98.14%

7866

Canara Hsbc Life Insurance

98.12%

1252

Bajaj Allianz Life Insurance

98.02%

11887

Aegon Life Insurance

98.01%

344

ICICI Prudential Life Insurance

97.84%

11212

Aditya Birla Sun Life Insurance

97.54%

5035

Aviva India Life Insurance

97.53%

790

Bharti Axa Life Insurance

97.35%

1285

PNB MetLife Insurance

97.18%

4241

Daiichi Life Insurance

96.96%

1210

Life Insurance Corporation India (LIC)

96.69%

733809

Indiafirst Life Insurance

96.65%

2166

IDBI Federal Life Insurance

96.47%

1366

Kotak Life Insurance

96.38%

3225

Future Generali Life Insurance

95.28%

1089

SBI Life Insurance

94.52%

21257

Shriram Life Insurance

91.61%

2816

Sahara India Life Insurance

89.54%

585

Edelweiss Tokio Life Insurance

83.44%

272

(Source: IRDAI Annual Report - Claim Settlement Ratio for the year 2019-20)

Types of Life Insurance Claims

Following are the two types of life insurance claims:

1. Maturity Claims: Maturity claims are payable at the time of maturity of the life insurance policy. This means when the policy tenure ends and the policyholder survives the whole policy tenure a certain amount is paid to the policyholder itself. Maturity claims are only paid when the policy term ends and the premiums are paid on time. The policyholder is required to fill a duly signed discharge form to avail maturity claim. The amount received from maturity claim is considered to be tax-free as per the current Income Tax Act.

2. Death Claims: In death claims, the claimant can make a request for death benefits upon the demise of the policyholder. This means a sum assured amount is settled towards the beneficiary upon the death of the policyholder in any case. The sum assured is paid to the beneficiary only after the death of the policyholder is intimated to the insurance company. The death intimation includes policy number, date of death, cause of death, and the policy term upon which the company investigates the death claim. Amounts received as the death claim are considered to be tax-free as per the current Income Tax Act under Section 10(10D).

Documents Required for Life Insurance Claims

Following is the list of some of the mandatory documents required for life insurance claims:

  • Claim Forms (Duly signed and attested)
  • Original Policy Documents
  • Death Certificate attested by the local authorities
  • Copy of FIR/Post Mortem Reports/Punchnama
  • Medical Records (including hospital discharge summary)
  • Claimant’s Photo ID Proof
  • Claimant’s Address Proof
  • Copy of Cancelled Cheque/Bank Statement/Bank Passbook

Claim Settlement Process of Life Insurance Policy Claims

Listed below is the process of life insurance claim settlement followed by most of the insurance companies. However, every insurance operates differently hence the claim settlement process for a life insurance claim can differ from insurer to insurer:

Step 1: Claim Intimation: The beneficiary is required to intimate the claim either in a written format or online (on the insurance company’s official website) to the insurance company as soon as possible. The claim intimation should have the information of the policyholder and the claimant such as policy number, name of the policyholder, cause of death, place of death, and claimant details. The beneficiary can visit the insurance company for claim intimation or download the forms online from the insurance company’s website.

Step 2: Submission of Documents: The insurance company requires some documents to settle the claim, which the beneficiary is required to submit within the stipulated time. With help of the relevant documents, the insurance company will be able to carry out an investigation if required or ask for any additional documents required. Submission of relevant documents at this stage is necessary to avoid any possibility of fraud.

Step 3: Claim Evaluation and Settlement: After all the documents have been submitted to the insurance company and the claim is thoroughly evaluated a settlement decision is taken by the insurance company. Usually, it takes 30 days for an insurance company to settle a claim upon receiving the documents submitted. If an investigation is required in any case the insurance company takes 120 days to settle a claim.

Note: Claimant must thoroughly go through the terms and conditions and submit all the required documents for the claim, failing to do so will affect the claim settlement process.

Common Reasons For Rejection of Life Insurance Claims

Here is some common reason for rejection of life insurance claims:

1. Mentioning false inaccurate or false information in the application for a life insurance plan.

2. Not paying premiums on the due date or during the grace period.

3. Causes of death that are not covered by the insurance policy such as suicide before the completion of the first policy term, accidental death caused by overconsumption of alcohol/drugs.

4. A fraudulent claim made by the beneficiary.

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FAQ About Life Insurance Claim Settlement

  • What is Claim Settlement Ratio?

    The claim settlement ratio is a metric to gauge the percentage of life insurance claims an insurer has settled during a financial year against the number of claims it receives in the period including pending claims from last year.

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