Claims in Life Insurance

Life insurance has become more of a necessity than a luxurious investment today. Initially, when this policy was introduced, people used to opt for it only when they perceived a threat to their life or when they wanted to invest some money in an assured path. Today, times have changed and so have people’s mindsets. They have slowly but steadily understood the importance of life insurance and hence,   more and more number of people are opting for this policy plan. Life insurance, as the name suggests is an insurance that secures the life of the policyholder.

Similar to other insurance policies, the policyholder has to pay the premiums of the policy to ensure that an assured amount is paid at the end of the period. In the case of death of the insured, the nominees are paid the claim amount. What is claim amount? It is the amount that the policyholder signs up for during his/her presence. The nominees are entitled to the claim. This is the most basic type of claim, called the death claim. To claim this amount, it is very important to intimate the death of the insured to the insurance company.

The different types of claims in life insurance are:

Maturity Claim:

 This claim is made after the policy term ends and while the insured is still alive. That is when the claim amount is settled with the policyholder. The process is simple – the insured has to fill a maturity claim form and the insurance company then starts the process.

Survival Claim:

 There are certain types of insurance policies where in, the insured is entitled to a percentage of the sum assured amount (like a maturity claim) before the maturity of the insurance. This claim usually happens after a certain period of time, say every 5 years, 10 years, etc.

Death Claim:

 The normal and basic claim in life insurance is the death claim. Just as the name suggests, in case the insured passes away during the insurance period, the insurance company needs to action the death claim. The money insured by the policyholder goes to the nominee.

How to Claim life insurance in India:

 The life insurance policy can be claimed if the insured or the nominee fulfils the criteria of the claim. The following are the steps to be followed to claim life insurance in India:

Step #1: Intimation of the claim to the insurance company

 This is the first step. Be it any type of claim, on the occurrence of the insured event, one has to reach out to the life insurance company and let them know that one would like to make a claim on the insurance policy.

Step #2: Form filling and documentation

 Once the insurance company accepts the claim, they provide certain forms to be filled. Once the forms are submitted, they need to be submitted on or before the due dates.

Step #3: Submission of documents

 There are certain documents that have to be submitted along with the duly filled forms in order to prove that one is eligible for the claim. Once the documents are submitted, they will be verified by the insurance company.

Step #4: Claim settlement

 After all the above steps are fulfilled on time, the insurance company investigates the claim depending on the type of claim. If it is a death claim made in the early years, like within 2-3 years, extensive investigations are carried out. Once the validity of the claim is established, the insurer releases the claim amount to the eligible person.

Significant Benefits of life insurance

Tax-free: Life insurances have the benefit of reduced taxation. The logic is simple – since one pays the premiums out of the money left after paying taxes, one is not entitled to any further taxes. The premiums paid are eligible for tax deductions under section 80 C and the claim amount i.e. Maturity and Death Benefit are completely tax free under Section 10 (10D) of the Income Tax Act, 1961.

Last but not the least; it helps secure the future of loved ones. As one can understand from the name – a life insurance helps secure the financial stability of loved ones. One pays premiums for those times when one may not be around and a financial need may arise for the family.