Term Insurance Policy – Buy Online and ensure your Claim is paid

A lot of us are buying the term insurance policy online, but always have the fear of claim rejection in our minds.  The worst is that if a claim was indeed to be and there is something amiss, we are no longer there to explain anything to the insurance company or our agent.

So many of us wonder “How can I minimize the chances of my claim for a term insurance policy getting rejected?”

In my view, there are 2 ways to do address that.

1. Completeness of Information : Ensure your application form is filled accurately and completely – all details (big or small, present or past) are mentioned.  A detail not provided could become important if the reason for the claim is linked to this unmentioned fact directly or indirectly.
2. Medical Check-up :  Depending on the company and the extent of life cover, almost all insurance companies offer some level of term insurance cover without any medical test.  Not that it is a problem, but if there is indeed a medical check-up done, it’s great!  It means that the insurance company has completely assessed your current status of health in the way it deems fit to take the risk of your life for the applied period.  This also ensures that there are no health-related reasons for rejection of the claim later.  In instances where the company does not ask for a medical test, you could even choose to submit the reports of your latest medical tests (or of the last annual check-up), if you have one handy.  And you can do this even without their asking – they generally don’t discourage that.

While the second point is easily understood, here I will explain the first – why information you submit to the insurance company is critical when buying a term insurance policy.

How Buying Online can increase chances of claim acceptance

1.  When you buy a term insurance policy online, it is You who will fill up all details in the online application form.  Rather than having an agent to do it, you will be able to ensure that all the questions are accurately answered and submitted.  I have seen (some) agents discourage customers to give too many details with the fear of the application getting rejected.  The interest of such agents lies in the commission they get, perhaps not in ensuring your claim is paid.  That’s all the more reason that you need to do the work of filling up the form yourself.  That is better than having to pay premiums and if the worst were to happen, not getting the claim for some stupid reason.  Remember this is a term insurance policy, there is no other ‘benefit’ except the claim payout.

Sometimes if your health is adverse, the insurance company may also charge you a higher (10% to 150% extra) premium for the insurance cover.  You could still go ahead and accept to pay the higher premium rather than not mentioning an important fact to avoid this possible premium increase. 

A common example of facts hidden when buying a term insurance policy is Smoking Habits.  If you were to die of lung cancer at a later stage, the insurance company can find out that you were a smoker when you applied for the insurance.  Chances are high that your claim will be rejected.  Instead, if you had disclosed at the time of application that you were a smoker, you would have had to pay slightly higher rates, but it saves your family the trauma of not getting a claim.

Sometimes, Diabetes is not disclosed when buying a term insurance policy.  This is a unique illness that can lead to many other causes for death such as heart attack, kidney failure, etc.  By not mentioning diabetes, you are reducing your chances of getting the claim if you were to die from any of those illnesses that can be caused by diabetes.

I pray therefore that you mention everything clearly when you buy a term insurance policy online and don’t mind paying the extra premium if you are serious about protecting your family.

2.  When filling up the application form, there could be a few questions that you will not be comfortable talking about or revealing to anyone else.  These could be related to personal health, habits, etc.  Some customers also are not comfortable if the agent is not of the same gender – it is a little tricky revealing certain confidential (sometimes embarrassing) facts to them.  But remember, it is important that it is mentioned.

Here buying term insurance policy online makes perfect sense because your information goes directly from your computer to the company’s underwriter (someone who takes the decision whether to accept or reject your online term insurance application), who you will never see or know, and who could also be doctors.

In general, life insurance companies treat the online customer different from others.  They understand that this is different class of customers with much better quality of self-disclosure.  They have even indicated a preference to this class in the recent past through the acute reduction in premiums (30-50%) for online customers compared to other customers.

If you have a good agent who understands the importance of term insurance policy (someone who will recommend this as the first insurance policy you should buy), you should go ahead and buy with him/her help.

If not, just buy online.  And before you do that, do read this!