When you think about planning your finances, having just adequate savings in the bank may not prove to be enough, especially if you have financially dependent family members. How do you ensure their futures are secure and they have enough financial resources to achieve their dreams and goals? Or even maintain their current lifestyle?
The answer is - term insurance! A term insurance plan will act as a financial backup for your loved ones. It protects your loved ones by providing them with a sum of money if you pass away.
However, like in all insurance policies, a claim request will be needed to be filed by your nominee to receive the cover amount under your term insurance plan. And, with you not being around anymore, the process might get confusing for them - especially with all the existing emotional distress.
In this article, we’ll discuss the term insurance claim settlement process, so your nominee can have a hassle-free and smooth journey.
First, What is Term Insurance?
Term insurance is the simplest type of life insurance. It aims to financially secure the future of your loved ones by paying them a fixed amount of money (also known as the ‘sum assured’) as the death benefit - if you pass away during the policy term. This money will act as an income replacement and will help your family take care of their financial needs and goals without compromising on their dreams and lifestyle.
How Does Term Insurance Work?
The functioning of term insurance is pretty straightforward. If you pass away while the policy is still in effect, your insurer will pay a fixed amount of money to your loved ones as a death benefit. This money can be used to settle debts, meet daily needs, fund long-term and short-term goals, etc. But, if you survive the policy term, you won’t receive anything.
For example, Madhuri is a single mother with an 18-year-old daughter who is financially dependent on her. She purchases a term insurance plan with a sum assured of Rs. 1 crore for a policy duration of 25 years and appoints her daughter as the nominee. If Madhuri passes away during these 25 years, her daughter will receive the sum assured of Rs. 1 crore. She can use the amount for her everyday expenses, tuition fees, and maintaining her lifestyle. But, if Madhuri survives the policy term of 25 years, she won't receive any returns from the plan.
Term Insurance Claim Settlement Process
These are the steps your nominee will have to follow to make a claim under your term insurance plan -
1️⃣ First, they will need to inform the insurance company about your passing away and making the claim. They can either do this offline by visiting the insurer’s nearest branch office or online by contacting them over the phone, email, or website. After the insurance company has been informed, the claim settlement process will commence.
2️⃣ Once the insurer is notified, your nominee will need to submit the relevant documents along with a duly filled claims form to support the claim request. Remember, the list of documents may vary for all insurance companies. Your nominee can get the claim form from the branch office or the insurer’s website.
3️⃣ When submitting the documents, the insurer should provide a system-generated acknowledgement of receipt to your nominee. It is important on your nominee's part to keep a scanned copy of all the documents for future reference.
4️⃣ The insurer may sometimes ask for some additional documents to support the claim. So, to avoid any delay in the claim process, your nominee will need to submit the additional requested documents promptly.
5️⃣ After the submission of all the documents, your insurance company will assess them and decide whether to approve or reject the claim. If it gets approved, your nominee will receive the claim as per the payout option you had chosen during the policy purchase.
A term insurance plan is crucial to protect the financial future of your family members. Just having a plan won’t make much sense if you are unaware of the claim process. In case of your sudden death, your nominee should be able to file the claim seamlessly and avail of the sum assured as the death benefit. We hope the steps discussed in this article made you understand the term insurance claim process better.