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Business News/ Money / Personal Finance/  Common reasons why term insurance claims get rejected

Facing a term insurance claim rejection can be distressing, particularly when the policyholder is the primary financial provider for the family. Although the policyholder might not be present to address a denied claim, it’s vital to understand and avoid common pitfalls that can lead to term insurance claim rejections.

Concealing pre-existing diseases: When purchasing a term insurance plan, customers should provide all material information regarding their income details, health status and medical history, and lifestyle truthfully. If applicants withhold or give false information, it can become a valid cause for rejecting a claim.

Sunil Sharma, president, chief risk officer and actuary at Kotak Mahindra Life Insurance, said, “If the insured did not disclose his correct health status or any existing personal medical history impacting his health while purchasing a policy, his claim could get rejected. The life insurance policies are typically based on assessing the health declarations or information the applicants share. Moreover, if the insured did not disclose his correct occupation/hobby, which may be hazardous in nature while purchasing the policy, and the information was so significant that had he disclosed correct details, this could have led to the denial of coverage."

Delay in premium payment: A lapsed policy cannot fetch any benefits. Sometimes, policyholders forget to pay timely premiums. For this, insurance companies offer a grace period. This grace period can go up to 30 days. However, if the policyholder does not pay the premium, the policy is marked as a lapse. Hence, policyholders must ensure they pay the premium towards their term plan on or before the payable date. For instance, the insurance company will reject the claim if a claim is made even a day after the policy lapse.

Withholding information about existing insurance policies: When purchasing a term plan, it is necessary to disclose all the current and previous insurance policies to the insurer. Rhishabh Garg, head of Term Life Insurance,, said, “Withholding information about existing insurance policies can get your term insurance claim rejected, as this is relevant information essentially required by the policymaker for a complete risk assessment."

Undisclosed lifestyle choices: Information regarding lifestyle habits like smoking, drinking, and unhealthy eating, must be disclosed to the insurer while buying the term insurance. Moreover, if someone is inclined to adventure sports like deep-sea diving, paragliding etc., they must inform the insurer before applying for a term plan. This will help the insurance company to evaluate the individual’s case better.

Absence of updated nominee details: Failing to update the nominee details calls for a list of documentation to prove the line of succession. This process is cumbersome and creates hindrances in insurance claim settlement. If the insurance company cannot verify the legal heir, it may lead to claim rejection. Indraneel Chatterjee, Co-founder of RenewBuy, said, “Sometimes, claim settlements can also get rejected in the absence of a nominee. If the policyholder forgets to update the nominee’s name, it can lead to claim rejection. In many instances, the nominee would not know that he is entitled to a claim and reaches out to the insurer very late when the claim investigation becomes difficult or impossible."

Fraud: “Refers to insurance fraudsters who take out a life insurance policy for someone who is terminally ill, or in some cases impersonate persons who are already dead just so that they can avail of the life cover, said Satishwar B., MD & CEO, Aegon Life Insurance.

Grievance redressal mechanism: If you think the insurer outrightly rejects your claim without giving you any valid reason, you can approach the Grievance Redressal Officer. Most insurers have multiple modes of access for policyholders and nominees.

Firstly, nominees can approach the insurance company from where the policyholder has purchased the insurance coverage. Every insurance company has a dedicated grievance handling cell as mandated by the Insurance Regulatory and Development Authority of India (IRDAI). The Insurance company usually lists the details of its grievance cell in the policy document. The first thing that a nominee should do is visit the insurer’s website and go to the customer service or claims section, as appropriate. There, the company lists all the ways to contact them, typically including a WhatsApp number, email address, chatbot, a toll-free number to call, and sometimes the nearest branch. These services are available even if you purchase the policy through an agent.

The nominee can call on the number or write a letter or mail mentioning the issue. Suppose the nominee does not get a response within 15 days. In that case, he can contact the insurance company’s regional or central office’s grievance cell, stating that the grievance has not been acknowledged or addressed.

In case the issue gets directed to IRDAI, one can reach out to a Grievance Redressal Officer (GRO) to register a complaint at a higher level. There is also a cell for the redressal of grievances at IRDAI, where policyholders can register their complaints with the regulator under the “Bima Bharosa system" (

Even after that, the nominee can approach the ombudsperson if the nominee does not receive solutions. The ombudsperson will hear the case and pass judgment, which can finally help a nominee solve the issue.

Navneet Dubey
Navneet Dubey is a personal finance writer and artist. Over the past decade, he has written feature stories on insurance, financial planning, lending and borrowing.
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Updated: 04 May 2023, 05:21 PM IST
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