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Yogi Zone

Useful articles for your finance management by our team of experts

Claim Settlement for Online Term Life Insurance Policy

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claim settlement for online insuranceSince, today we do not know what is going to happen tomorrow, we all plan to buy insurance policies to cover such contingencies. Online term insurance policies are at their peak these days they are much cheaper than its offline variants. Online policies are almost half the cost of offline policies. Such a sharp fall is mainly because insurers save a lot of cost by floating their policies online. In general 20 – 25 % cost of term policies is paid to the agents in the form of commission, which comes from the pocket of policy buyer. Also they do not have to pay in managing the distribution channel and in moving paperwork electronically; therefore, it saves a good amount. This difference in offline and online policies creates a price war between the companies. To sustain this war, few companies offer their online products 70 % cheaper than the regular offline policy sold by an agent.

Though this competition gives an improved price preposition to the customers, it also brings a threat to the industry. What happens if you came across the fact that in the previous year, some private insurance companies have rejected almost one – third of the claims. Some of the industry experts concluded that companies with such low premium policies will not able to sustain in the market and it will affect the claim settlement capability of the company. As the prices of online policies are not scientifically correct, it is difficult for companies to make profits from such low premiums.

Will your Online Policy Settle the Claims Easily?

In such an early phase, it is hard to say whether low premiums of policies have an impact on the claim settlement and there are two factors which are responsible for this uncertainty. One is unavailability of specific data. As the insurance companies never specify claim records across policy and the Insurance Regulatory and Development Authority (IRDA) also provides collective figures in its annual reports, it is hard to segregate the claim settlement status of particular product. Secondly, these policies are introduced to market in last few years, so the claim rejections in early stages are higher when company carries out thorough investigation.

The claims of online policies may be rejected due to the non – disclosure of vital information about one’s health at the time of proposal. There is a renowned company whose 79 % of claim rejection is due to non-disclosure of chronic diseases like cancer and other heart diseases. Always keep in mind that at the time of buying term cover online, many insurance companies do not make it compulsory to go for a health checkup for persons below a definite age, however it is your job to reveal all the facts about your health. On the other hand, in offline policies, there are agents who make it mandatory to go through medical examination. Though it seems very annoying, it makes the claim settlement much easier and results in lesser chances of claim rejection, especially if it is an early claim. The other reason for claim rejection is, if the policy has lapsed at the time of policyholder’s death. Any term insurance policy would lapse if the payment of due premium is not paid within the grace period, which is usually 15 – 30 days from the due date. Also, many times, policy holders don’t fill the proposal form accurately, which leads to claim rejection.

Finally

Online policies have certain flaws because of which they are gaining slow popularity compared to offline products. The other problem with online policies is that they get lapsed due to lack of follow-up. Ensuring a hassle free claim settlement is mainly in the hands of the policy holder. If the policy holder discloses all the vital information regarding his health, then chances of claim rejection will be less. Always check the history of the insurer regarding the claim settlement and compare the same with peer companies before buying any online policy.

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