Settlement of Claims

A claim is the demand made on the insurer to pay the policy money when the event covered by the contract occurs. In life insurance a claim can arise in two ways, and the procedure of settlement differs for each.

1. Maturity claim (survival claim). This arises when the policyholder survives to the end of the policy term (or a money-back instalment falls due). Since the insurer already knows the maturity date, the process is simple:

• The insurer usually intimates the policyholder in advance and sends a discharge form.
• The policyholder returns the completed discharge form together with the policy bond and proof of identity/age (if age was not earlier admitted).
• On verification the insurer pays the sum assured with any accrued bonuses.

2. Death claim. This arises when the life assured dies during the term. The steps are:

• Intimation of death. The nominee or legal heir informs the insurer in writing, giving the policy number, the date, place and cause of death.
• Submission of documents. The claimant submits the death certificate, the policy bond, proof of the claimant's title (nomination, assignment or legal succession), and the insurer's claim forms; for deaths soon after the policy started or from unnatural causes, additional papers (medical, police or hospital records) may be called for.
• Verification. The insurer checks that the policy was in force, that the claimant is entitled, and that there is no fraud or suppression of a material fact.
• Payment. Once satisfied, the insurer pays the sum assured (with bonuses) to the nominee, assignee or legal heir.

Important points in claim settlement

• A claim is payable only if the policy was in force (premiums paid or the policy paid-up) on the date of the event.
• The early-death (suicide) clause and disputes over concealed facts may reduce or reject a claim; but after the indisputability period an honest claim cannot be repudiated on the ground of an innocent misstatement. …