Bought a Term Plan? 9 Things Your Nominee Must Know Before Filing a Claim

Bought a Term Insurance Policy? Prepare Your Nominee for the Claim Process

Term insurance is designed to provide financial support to a policyholder’s family after their death. However, the benefit can reach the family only after the nominee or other eligible claimant completes the insurer’s claim procedure.

For a family already dealing with a loss, finding policy documents, identifying the insurance company and understanding the paperwork can become difficult. Preparing in advance can help reduce this burden and make the process more manageable.

Here are nine important things every term insurance policyholder should explain to their nominee. (Economic Times)

1. Keep All Important Documents Ready

The nominee should know where the policy document and supporting records are stored. The exact documents required depend on the insurer and the circumstances of death.

For a natural death, the usual requirements may include:

• Original policy document or policy details.

• Death certificate issued by the relevant authority.

• Completed claim form.

• Nominee’s identity and address proof.

• Bank account details or a cancelled cheque.

• Medical records, hospital papers and documents explaining the cause of death, where applicable.

If the death is accidental or otherwise requires investigation, the insurer may also ask for documents such as an FIR, post-mortem report, inquest report or other relevant police records.

The list is indicative rather than exhaustive. The nominee should obtain the insurer’s official checklist before submitting the claim. (Aditya Birla Sun Life Insurance)

2. Inform the Insurance Company Promptly

The first practical step is to notify the insurer about the policyholder’s death.

The nominee can generally report the claim through the insurer’s website, customer-care service, email or nearest branch, depending on the available channels.

While reporting the death, the nominee should provide the policy number, policyholder’s details, date of death and other information requested by the company.

Policyholders should tell their nominees which insurer issued the policy and where its contact information can be found. This can prevent delays caused by uncertainty about whom to contact. (Economic Times)

3. Submit the Claim Form Correctly

After the insurer registers the claim, the nominee must complete the prescribed claim form and submit the required supporting documents.

Forms and submission procedures can vary between insurance companies. The nominee should answer questions accurately, check that the information matches the supporting records and keep copies of everything submitted.

If the insurer asks for additional documents or clarification, the nominee should respond promptly and retain proof of submission. Incomplete paperwork can delay the assessment.

4. Understand How Long Claim Settlement Can Take

A claim is not necessarily paid immediately after it is reported. The insurer must verify the policy, documents and circumstances of death before deciding whether the benefit is payable.

Under the Insurance Regulatory and Development Authority of India’s applicable policyholder-protection framework, life insurers generally must settle or reject a claim within the prescribed period after receiving the relevant documents and clarifications. The applicable timelines distinguish between cases that do not require investigation and those that do.

The nominee should ask the insurer for a claim reference number and use it to track progress. If the insurer requests additional information, the family should keep a record of the request and its response. (IRDAI)

5. Do Not Assume a 24-Hour Claim Promise Applies to Every Case

Some insurers advertise fast or 24-hour claim settlement services. However, these promises are generally subject to specific conditions.

Depending on the insurer and policy, the benefit may be restricted by the sum assured, the number of years the policy has been active, the completeness of the documents and whether the claim requires further investigation.

A claim involving missing records, medical verification or legal procedures may not qualify for expedited settlement.

Policyholders should check the exact terms of any fast-settlement facility and explain its limitations to their nominees. A marketing promise should not be treated as a guarantee that every claim will be paid within 24 hours. (Economic Times)

6. Know When Interest May Be Payable for Delays

Insurance regulations provide for interest in specified circumstances when a life insurer delays claim processing beyond the prescribed period.

Under the relevant IRDAI framework, interest may be payable at a rate linked to the bank rate, with an additional two percentage points, where the regulatory conditions for delay are met. Different provisions can apply where a claim is ready for payment but the insurer cannot identify the proper payee.

The nominee should therefore maintain a record of when the claim was filed, when all required documents were submitted and any subsequent communication from the insurer. If there is an unexplained delay, the claimant can ask the insurer to explain the reason and whether interest is payable. (IRDAI)

7. Fill in the Proposal Form Honestly and Pay Premiums on Time

The claim process can become complicated if the policy contains inaccurate information or if important facts were not disclosed when the insurance was purchased.

Policyholders should provide accurate information about medical history, existing insurance policies, smoking or tobacco use and other material facts requested in the proposal form.

They should also pay premiums by the due dates and understand the policy’s grace period and lapse conditions. Keeping a payment record and setting up an automatic payment instruction can help reduce the risk of missed premiums.

A nominee should know where the proposal form and policy schedule are stored, although the responsibility for providing accurate information rests with the policyholder when applying for insurance. (Economic Times)

8. Understand the Married Women’s Property Act Option

For eligible policyholders, a life insurance policy taken under Section 6 of the Married Women’s Property Act, 1874, can provide a specific legal arrangement for the benefit of a wife and/or children.

Where the Act applies, the policy proceeds are generally protected for the designated beneficiaries from the policyholder’s creditors, subject to the law and the terms of the arrangement.

This is not an automatic feature of every term plan. The policyholder must understand the requirements and complete the appropriate documentation when taking the policy. It is worth discussing the option with the insurer or a qualified legal adviser if the policyholder wants to create this protection for their family. (Economic Times)

9. Tell Your Nominee Where Everything Is Stored

The final step is to make the information easy to access when it is needed.

Policyholders should keep the policy document, premium receipts, insurer’s contact details, nominee information and other relevant records in a secure, organised place. They can also maintain digital copies or use an e-insurance account where appropriate.

The nominee should know:

• The name of the insurance company.

• The policy number and sum assured.

• Where the policy and related documents are stored.

• How to contact the insurer or the agent who helped purchase the policy.

• How to submit and track a claim.

Policyholders should also review nominee details periodically and update them when necessary. If an insurance agent or financial adviser helped arrange the policy, the policyholder can introduce that person to the nominee so that the family knows whom to contact for procedural assistance.

Term Insurance Claim: Quick Checklist for Nominees

TaskWhat to doLocate the policyFind the policy document and policy numberNotify the insurerReport the death through an official channelComplete paperworkSubmit the claim form and required recordsProvide bank detailsGive the requested account information for paymentRespond to queriesSupply additional documents or clarificationsTrack the claimKeep the reference number and communication recordsFollow up on delaysAsk for an explanation and check whether interest applies

What Can Cause Problems During a Term Insurance Claim?

A claim may require additional verification if the policyholder’s records are incomplete, the cause of death needs investigation or information in the proposal form differs from the available evidence.

Other complications can arise if the policy was not in force, premiums were not paid as required or the claim relates to an exclusion or condition in the policy.

These circumstances do not mean that every claim with a discrepancy will automatically be rejected. The insurer must assess the case under the policy terms and applicable law. Nominees should respond to queries carefully and seek professional advice if the claim is disputed.

Key Takeaways

• Buying term insurance is not enough; the nominee must know how to claim the benefit.

• Keep the policy document, death certificate, claim form, identity proof and bank details accessible.

• Notify the insurer promptly and retain the claim reference number.

• Medical, police and post-mortem records may be required depending on the circumstances of death.

• Fast claim-settlement promises usually come with eligibility conditions.

• IRDAI rules provide for claim-processing timelines and interest in specified cases of delay.

• Accurate disclosures, timely premium payments and accessible documents can help reduce avoidable claim complications.

• Review nominee details and explain the claim procedure before it is needed.

Bottom Line

A term insurance policy is intended to protect a family financially, but the nominee needs to know how to access that protection. Explaining the claim procedure, organising documents and sharing the insurer’s contact details can save a family considerable time and stress during an already difficult period.

Policyholders should make these preparations while they are healthy and able to explain their arrangements clearly. A few practical steps today can make it easier for their family to file a claim when the need arises.

Disclaimer: This article is for general information only. Claim requirements, settlement timelines and exclusions depend on the policy and applicable regulations. Nominees should verify the latest requirements with the insurer and consult a qualified professional if a claim is disputed.