When an individual buys a life insurance policy, his aim is to create a safe and secure financial support-system for his family in the unfortunate circumstances of his untimely death. But sometimes, a small negligence or some grave mistakes can lead to a rejection of the life insurance claim. This leaves the bereaved family in an all the more difficult situation. The loss of a loved one is coupled with this horrific scenario.
As a life insurance policy buyer, you must understand the reasons that can lead to a life insurance claim rejection. Be very careful to avoid these, as even a small carelessness from your side can make life hellish for your family, in your absence.

1. Non-payment of Premium

One of the most careless reasons behind a life insurance claim rejection is the non-payment of premium. How can you fail at keeping your promise of securing your family’s future? You must never forget that a life insurance policy will stay active only and only till the time you pay the premium. In case of a lapsed policy, the life insurance company has all the right to reject your life insurance claim. The life insurance companies mostly give a grace period of 30 days, do not miss the reminder notifications.

2. A death not covered by your life insurance policy

You must be fully aware of the ‘reasons of death’ which are not covered by your life insurance policy. The life insurance company has all the rights to out rightly reject the life insurance claim in the following cases:

Suicide

The rules for ‘death by suicide’ are different for different insurance plans and companies. While certain linked plans provide a 100% life insurance claim, certain unlinked plans provide only 80% of the sum assured to the nominee, while some companies reject the life insurance claim made by the family.

Drug Overdose

If it is found that the individual has died due to a drug overdose, the life insurance company will reject his life insurance claim.

Drunk Driving

Most companies will surely reject a life insurance claim if they discover that the insured individual was driving under the influence of alcohol or any other drug, that caused the death. Under such situations, it has the right to reject the life insurance claim.

Death Outside the Country

If you buy a life insurance policy in India and then go abroad for a business or pleasure trip, your life insurance policy may not work if you die there.

Terrorist Attack

Though under humanitarian ground if the nominee requests the IRDA, the life insurance claim may be settled, but in most cases death in a terrorist attack does not qualify for a life insurance claim.

Natural Calamities

The life insurance company may also reject a life insurance claim if the death is because of earthquakes, flood or any such natural disaster.

Adventure Sports

If the insured individual dies while skydiving, river water rafting, bungee jumping etc. the life insurance company can reject his life insurance claim.

The life insurance company will scrutinize the reason of the death minutely, and it is very rare that they might miss a detail. As a family member, you must not try to conceal the facts. In case the life insurance company finds out that you are trying to do such a thing, your life insurance claim can be surely rejected. So, it is highly recommended that the insured individual as well as the nominee are well aware of the terms under which the life insurance claim can be rejected.

3. Furnishing of Incorrect Information

Concealing or not furnishing honest information can turn out to be a big blunder on your part. Many of us try to hide our lifestyle habits like smoking and drinking, while filling our details in the life insurance enrollment form. There are also some who consider filling every tiny detail to be too much of an effort, not realizing that details like age, height, weight etc. are very essential. It is also imperative to disclose if you also have some other company’s life insurance plan. Your medical history must be accurately presented to your life insurance company. Do not try to fool the life insurance company to save a few thousand rupees, as your family may have to pay the price by facing a life insurance claim rejection.

4. Smoking- this deadly habit can cost you your life insurance claim

If the insured individual has started to smoke after the purchase of his life insurance policy, it is his duty to inform the life insurance company that he has developed this lifestyle change. The premium for a smoker is quite higher than a non-smoker. So, if you do develop this deadly habit, you need to inform the life insurance company at the earliest and they would increase the life insurance premium. If you do not do so and if you get a life-threatening disease after this habit, the life insurance company can term this as providing inaccurate medical facts and declare your life insurance claim to be invalid.

5. Homicide

If the insured individual is murdered and it is established that the nominee is the murderer, then the life insurance company has the right to reject the life insurance claim. After a detailed inquiry if the nominee is declared ‘not-guilty’, or the charges are dropped or in case the nominee is acquitted, the life insurance claim can be made.

6. If the policyholder dies in the Contest-ability Period
A death soon after the purchase of a life insurance policy, can cause a lot of suspicion. It may make the life insurance company to conduct a thorough investigation if the individual dies within the contest-ability period. The contest-ability period is generally between 12 months to 2 years and it starts the day you buy the life insurance policy. Certain life insurance companies reserve the right to reject a life insurance claim if the insured individual passes away during this period.

Your untimely death and then the life insurance claim rejection, can prove to be the scariest things that could happen to your family. Being the breadwinner of the family, you religiously paid the premiums all your life to ensure that your family can get some financial stability even after your death. But the above mentioned are the conditions which can make your hard work go down the drain. You must read the life insurance policy documents very carefully and keep the nominee informed about the details too. Make it a thumb rule to avoid the above-mentioned mistakes and keep the promise of protecting your family, even after you are gone.