Life insurance is a crucial part of the financial planning process. While for some it may seem like an expense, it is in fact a ‘save-your-savings’ tool. The right life insurance policy will not only help in safeguarding your family’s financial interest, but also be a financial support in their routine lives, after all, you want your family’s dreams fulfilled even in your absence.
A life insurance policy is a must buy financial tool, there are a few cases in which your insurance policy could be declined. Now that we know what is life insurance, let us look at some cases of rejected policy and the ways in which you can prevent it –
Giving incorrect information
Some people might fill out incorrect medical histories for the fear that their application might be rejected. Alternatively, they may not provide information about their previous insurance policies or the existing ones with different insurers. While some others might quote higher incomes to get higher sum assured benefits. Concealing information can at times be unintentional as well. Whatever the reason, filling out incorrect personal information or failing to give important information can lead your application form to be declined.
To prevent this, always ensure that you are giving complete and honest information about yourself. Always be alert and double check while filling out your form, in case you have unintentionally missed out on anything or given inaccurate information.
Not paying premiums on time
Life insurance policies can only remain active as long as you keep paying your premiums on time. If you regularly fail to pay your term insurance premiums on time, it can lead to your life insurance policy getting lapsed. You can also unintentionally miss to make your payments in instances where you have changed your home address, contact details and so on. Usually the grace period provided by insurance companies is 30 days, post which the policy lapses.
To avoid this from happening, pay your premiums regularly and be punctual with the premium due date. Renew your policy on time. Also, in case you change address or contact number, always inform the insurer and update your details for their reference.
There is no nominee
Once you buy a life insurance policy, you need to also provide details of the nominee. If you have failed to update nominee details, or missed appointing a nominee in the first place, your policy can be declined. Not just that, it can lead to other issues like delay in claim settlement or even denial of the same.
To prevent this from happening, do not miss to appoint a nominee when you buy a life insurance policy. And in case of any changes, update the insurer about the new nominee details.
In case of your sudden unfortunate demise, your policy can decline. This can happen if your death was not covered in the term policy document, for instance, in case of an accidental death.
There is a certain income criteria that one needs to fulfil to avail the benefits of life insurance policy. If your income falls below the eligible level, then your policy can be declined. Different life insurance companies have different limits set to the income criteria. Insurance companies follow the principle of ‘insurable interest’, which means that insurance companies need assurance of your ability to sustain the cost of your life insurance cover.
To conclude, keep in mind the above mentioned points to avoid unnecessary rejection of your policy. Moreover, a life cover will help in planning for the times even when you are not around. Be smart and stay insured.