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Reasons for Your Life Insurance Claim Rejection

Life insurance claim rejected! Isn’t that the scariest thing that could ever happen to your loved ones, when you aren’t around? Find out the 5 reasons why your life insurer might reject your claim.

Someone’s rightly said, ‘Life is hard and death is even harder’.

You peacefully breathe your last and became a star up above the sky. Yes, peacefully because you know you have done all that you could for your beloved family back there.

Being the only breadwinner, you religiously bought a life insurance policy to financially secure your family members. After all, you would never like your spouse and dependent children to compromise leading a comfortable life, even in your absence. But, today you are devastated right up there, watching your family run pillar to post after the insurance company. Reason being the insurance company rejected your death claim!

Yes, you heard it right.

You still can’t believe because you remember very well how your life insurer emphasized you for their hassle-free claim settlement process.

What could have been the possible reasons for your life insurer to reject your claim?

Let’s find out certain situations where it is quite possible for your life insurance claim to get denied and how you can avoid them.

Did you give false information in the application?

Problem: Concealing important information while filling the life insurance application form can prove quite a blunder for your loved ones.

You might not find it necessary to input your right age, height, weight, occupation details etc. simply because its time consuming. Most of the people prefer hiding their smoking and alcoholic habits while filling the application form.

But, why?

This is mostly practised to pay lower premiums.

Not realizing the fact how frustrating it could prove for your family members while filing your death claim.

There are many who act like lazy pricks to provide information about their existing insurance policies being held with other insurers.

They find it difficult to gather information of their previous policies to pen them down in the new application form.

Some people do not provide correct medical history with the fear of their life insurance policy getting rejected.

At times, hiding information can be intentional or unintentional. Many times, insurance agents take the onus and fill up their clients form without cross-checking the information.

There are some who quote higher income just to get higher sum assured benefits.

Key: Be honest and alert while providing personal information while filling up the life insurance application form.

Stop acting over smart. After all, you don’t wish to see your family in financial hardships due to a legitimate claim rejection.

Did you forget to pay your premiums on time?

Problem: So you failed badly to keep up your promise of paying your life insurance premium regularly.

Be rest assured that your life insurance claim would definitely get rejected for allowing your policy to lapse on account of non-payment of premiums.

Remember a life insurance policy can be active as long as you keep paying the premiums on time.

Life insurance companies have all the possible right to upfront reject your death claims for a lapsed policy.

At times, people unintentionally miss to pay the premiums. They change their mobile numbers, probably their houses too. The insurer very well does their duty of sending mailers or reminder messages to the address mentioned on the application form.

Though insurers give you a grace period of usually 30 days, you fail to get the notification for premium payments just because you don’t receive the mailer due to a change in residence.

Key: Keep an eye on your life insurance premium due date. Be responsible enough to renew your policy on time to let your family have a hassle-free claim settlement.

Ensure to inform your life insurer in case of a change in your residence or contact details. Don’t blame your insurer for not sending reminder mailers to your new address. After all, the company won’t dream about the changes you inculcated!

You suffered a death that wasn’t covered in the policy

Problem: You failed to read the policy document correctly.

We all know that your life insurer will pay the sum assured to your beneficiary/ beneficiaries during any uncertainty. However, every insurance company has some standard exclusion list to avoid losses. These exclusions simply explain the conditions under which your life insurer will not honour your claims.

You may buy a life insurance policy to secure your family members financially. But, you soon end your life by committing suicide. You failed to read those minute lines in the policy documents stating, ‘Suicide would be covered only after completing one policy period’. Every life insurer will scrutinize the cause of your death minutely. You may have suffered an accidental death due to consumption of drugs, narcotics or alcohol.

You may have been a part of the war or you may have been a part of any hazardous activity which wasn’t covered under the policy. Your claim would also be rejected in case you die due to any pre-existing diseases. Something that calls out for a waiting period! Insurance companies have all the rights to reject your death claim, in case the type of death wasn’t covered under the life insurance policy document.

Key: Lack of knowledge can be dangerous. Policy documents are not meant to be kept in the sealed envelope in your closet. It is a guide that educates you about the inclusions and exclusions for the policy. Read this list provided in the policy contract and take necessary action within the Free Look Period.

So, don’t forget to read those asterisks if you want your family to lead a hassle-free life post your demise.

You missed to update or appoint a nominee

Problem: You bought a life insurance policy but failed to update the nominee details.

Well, 30% of the young Indians chose to opt for a life insurance policy at the beginning of their careers. This time the sole motive might be tax saving rather than family’s financial security.

You happily appoint your parents as your nominee. You slowly and steadily change your job, grow financially, get married etc. etc. Now, your spouse becomes your whole and sole. Your partner becomes your reason to live your dreams together or share your joys and sorrows together.

You feel you have done a wise decision of buying a life insurance policy in case something uncertain happens to you.

But, did you ring up your life insurer to update the nominee details or rather appoint one?


This may lead to delay of claims settlement or denial too in some cases.

Remember, the insurance company will pay the claim only to the nominee whom you have appointed during the policy term or the legal heirs.

Key: If you have undergone any material changes in life, do not forget to inform your life insurer. Updating or appointing the nominee details and status is something you definitely can’t give a miss.

You may change the nominee details as and when you wish to.

If death occurs during the contestability period

Problem: If the death occurs right post buying a life insurance policy, your insurance company may find it suspicious. Insurers may find it mistrustful if death happens so soon.

Every life insurance company has a contestability period. This period may range from 1 year to 2 years.

As soon as your life insurance policy gets issued, your contestability period comes in to force.

In case death occurs during the contestability period, your life insurer has all the rights to reject your death claim. An investigation would also be undertaken by the insurance company to find out if you provided accurate information at the time of application.

The contestability period plays an important in claim rejections.

Key: Though death is inevitable and comes uninvited, you ensure you do not purposely attempt to end your life. Your family members aren’t going to be benefitted because your life insurer would any way reject your death claim.

Thumb rule

Identifying a good life insurance company merely basis their claim settlement ratio or claim rejection ratio shouldn’t be practiced. A company having a high claim rejection ratio need not necessarily be a bad company. Your insurers aren’t there to reject your claims. Understand your policy document thoroughly. Follow the above mentioned points to allow your family to have a hassle-free claim settlement process. Remember, all genuine claims are settled by life insurance companies.

IRDA has taken steps to settle claims older than 3 years too. They can only be rejected in case of falsified data or on not meeting the terms and conditions of the policy document.