Term Insurance Claim Mistakes to Avoid - Ensure Smooth Payout for Your Family

Filing a term insurance claim should be simple - but even small mistakes can cause delays or rejection.

According to IRDAI, over 90% of rejected life insurance claims result from incorrect information or missing documents - not from policy disputes.

The good news? Every one of these issues can be avoided.

This guide explains the most common term insurance claim mistakes, why they happen, and how to ensure your family’s claim is processed smoothly.

If you’re a policyholder, fix these today. If you’re a nominee, use this checklist when it matters most.

Top Claim Mistakes & How To Avoid Them

1. Not Disclosing Health Conditions Honestly

Mistake: Hiding diabetes, blood pressure, or tobacco use to get a cheaper premium.
Impact: Claim can be rejected for misrepresentation.
Fix: Always declare your full medical history during purchase - even minor issues.

2. Incorrect or Incomplete Nominee Details

Mistake: Wrong name, relationship, or missing ID.
Impact: Delays payout or transfers claim to legal heir.
Fix: Update nominee every time there's a life event - marriage, childbirth, etc.

3. Policy Lapse Due To Missed Premium

Mistake: Forgetting to renew before due date.
Impact: Policy becomes inactive; no claim allowed.
Fix: Enable auto-debit, and renew within the grace period (15-30 days).

4. Filing Claim Late

Mistake: Claim filed months after death or event.
Impact: Delay verification; may trigger insurer investigation.
Fix: Nominee should file within 90 days of event - earlier is better.

5. Missing or Unclear Documents

Mistake: Submitting incomplete paperwork.
Impact: Stops claim processing midway.
Fix: Keep all key documents ready (policy copy, death certificate, nominee ID, bank proof).

6. Not Informing Family About Policy

Mistake: Policyholder never shares details with family.
Impact: Family doesn't know where to claim or which insurer to contact.
Fix: Share policy documents, insurer details, and claim steps with nominee.

7. Concealing Smoking Or Alcohol Habits

Mistake: Marking "non-smoker" despite usage.
Impact: If found in medical tests or post-mortem, claim may be denied.
Fix: Always declare lifestyle habits honestly - insurers don't reject honest smokers.

8. Submitting Falsified Documents

Mistake: Altered or forged certificates.
Impact: Permanent claim rejection and possible legal action.
Fix: Submit originals or notarized copies only.

9. Buying From Unverified Agents

Mistake: Policy bought from non-licensed or inactive agent.
Impact: Communication gap and claim handling issues.
Fix: Buy only from IRDAI-registered insurers or verified platforms like PolicyBachat.

10. Not Updating Contact Or Address

Mistake: Insurer can't reach nominee for verification.
Impact: Delays payout or causes abandonment.
Fix: Keep contact info updated in insurer records regularly.

Documents Nominees Should Always Keep Ready

Document	Purpose
Policy Document	Proof of coverage
Death Certificate	Mandatory for all claims
Nominee ID Proof	KYC verification
Bank Account Proof	For direct payout
Medical & Hospital Records	For natural death verification
FIR/Post-Mortem	For accidental death

Reasons Why Claims Get Rejected (IRDAI Data Insights)

Reason	% of Rejections	Preventable?
Non-disclosure of medical history	45%	Yes
Wrong nominee or missing KYC	20%	Yes
Policy lapse	15%	Yes
Late intimation	10%	Yes
Fraudulent documents	5%	Yes

How To Ensure Your Family’s Claim Is Approved

Be transparent - declare everything honestly at purchase.
Do annual policy review - update address, nominee, contact.
Share all details with spouse/children.
Use PolicyBachat Claim Assist for guidance and tracking.
Keep premiums active with auto reminders.

Local Insights

Avg. claim settlement time: 9 days.
Top claim reasons: Hospitalization documentation issues, delayed claim submission.
% of claims rejected due to non-disclosure: 22%.
Most trusted insurers for smooth claims: HDFC Life, ICICI Prudential, Max Life.

PolicyBachat Claim Assist Benefits

Free claim filing support for nominees.
24×7 tracking dashboard.
Pre-verification of documents.
Escalation help for delayed claims.
90% of assisted claims settled under 10 days.

Frequently Asked Questions

What is the most common reason for term claim rejection?

Non-disclosure of health conditions or smoking habits during policy purchase.

Can I change nominee after buying the policy?

Yes, anytime - just submit a nominee change form with ID proof.

What if death occurs abroad?

Submit attested death certificate via Indian Embassy - claim remains valid.

Are accidental deaths covered automatically?

Yes, under base cover. Add ADB Rider for double payout.

What happens if the insurer rejects my claim?

You can appeal via insurer’s Grievance Cell or IRDAI Ombudsman.

How can I track my claim status?

Through insurer’s portal or PolicyBachat’s Claim Dashboard.

Do insurers reject claims for late filing?

Not if delay is justified; provide written reason for delay.

Is suicide covered under term plans?

Yes, after 12 months from policy issuance (per IRDAI rules).

What if nominee also dies before claim?

Legal heir or secondary nominee can claim with succession proof.

Can claim be denied for minor errors in form?

No, minor clerical errors are usually corrected during verification.

Do I need a lawyer to file a claim?

No. PolicyBachat or insurer’s support team can handle it free.

Can multiple nominees claim together?

Yes, if percentages are declared in policy.

Are online term plans easier for claim filing?

Yes - simpler documentation and faster approval.

Is medical cause of death mandatory?

For hospital deaths, yes; for natural home deaths, doctor certificate suffices.

What’s the fastest way to ensure smooth claim payout?

Be honest at purchase, update records yearly, and keep documents accessible to family.

Customer Reviews

“Followed this checklist - my mother’s claim settled in 6 days.”

Akhil Nair, Kochi

“Helpful article - avoided missing documents.”

Rachita Mehta, Delhi

“Wish I read this earlier; now my family knows everything.”

Sandeep Rao, Hyderabad

“PolicyBachat claim team guided us step by step.”

Kavya Iyer, Bengaluru

“Explained common mistakes clearly - easy for families to follow.”

Anurag Banerjee, Pune

“Best guide for nominees - I’ve shared it with my relatives.”

Meena Krishnan, Chennai

Term Insurance Claim Mistakes To Avoid - Ensure Smooth Payout For Your Family