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Term Insurance Claim Rejection

Term insurance is one of the basic tools for an individual to ensure financial security and safeguard the future of their loved ones. Term insurance can protect your family against unfortunate events and provide a safety net which holds them together in times of financial crisis. However, the effectiveness of the safety net hinges on successful claim settlements. Term insurance claim rejection can be deeply distressing and unsettling for the beneficiaries exacerbating the emotional toll of an already challenging situation. Moreover, if the policyholder is the breadwinner for the family, the denial of term insurance claim can lead to existential concerns about the financial stability of your family.

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Written ByPalak Bagadia
AboutPalak Bagadia
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Palak Bagadia, Associate – Digital Marketing at Bajaj Allianz Life, with experience spanning content and performance marketing, recruitment, employee engagement in the BFSI industry.
Reviewed ByRituraj Singh
AboutRituraj Singh
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Rituraj Singh,With over 6.5 years of experience in the insurance industry, Rituraj Singh, Manager- Product & Brand Marketing at Bajaj Allianz Life Insurance overlooks new product launches, compliance, and brand projects, leveraging artificial intelligence and technology to enhance outcomes.
Written on: 7th July 2024
Modified on: 7th July 2024
Reading Time: 15 Mins

Hence, it is essential to get a comprehensive understanding of the factors leading to claim rejections and proactively address the common issues which may contribute to term insurance claim denials.


Common Term Insurance Claim Rejection Reasons


Let us take a look at some of the common term insurance claim rejection reasons so that the beneficiaries can save themselves during the need of the hour:

1. Non-disclosure of material information by policyholder

Term insurance is an agreement between the policyholder and the insurance provider1. It is based on the principle of utmost good faith wherein you are required to inform the insurer about every important fact that might affect your mortality risk. If you withhold or hide the material information during the application, you breach the principle of utmost good faith. In such cases, the insurer can reject your claim and suspend the benefits of your term insurance policy.

2. Incorrect or incomplete information

Providing incomplete or inaccurate details can also be one of the term insurance rejection reasons. Disclosure of all material information such as age, medical history, information about current or previous insurance, personal habits, income, etc. is significant to safeguard the policyholders from delays or rejection of claims. It's vital to thoroughly confirm, review and verify all the details and information before applying to ensure its accuracy.

3. Non-disclosure of any previous insurance policy

Disclosure of your previous and existing insurance policy is also essential at the time of application for a complete risk assessment by the insurance provider. Hiding or withholding the details of your existing insurance policies can result in claim rejections.

4. Nominee details may not be up-to-date

If the nominee details are not up to date, an insurance company may ask for additional documentation for substantiation of claims by legal heirs. However, if legal heir cannot be decided to their satisfaction, an insurance company may reject the claim altogether. Hence, it is necessary to regularly review and update nominee information to ensure that the intended beneficiaries receive the benefits of the policy without any hindrance.

5. Hiding or lying about critical illness

Providing false information or concealing critical illnesses intentionally can also be a term insurance claim rejection reason. True and correct disclosure about your existing health conditions is important to comply with the principle of utmost good faith.

6. Late payment of premiums

Timely payment of premiums is necessary to keep your policy active. Late or delayed premium payments can lead to policy lapses, rendering the benefits void.

7. Undisclosed lifestyle choices

The policyholder at the time of application should also inform the insurer about their lifestyle habits which can take a toll on their health and may increase the risk involved. Lifestyle habits such as smoking, drinking, unhealthy eating habits, and adventurous sports are material facts which should be disclosed to the insurer. This will help the insurance provider to assess the individual’s case better. If kept undisclosed, such information might also lead to rejections of claims as it is another ground for a breach of the principle of utmost good faith.


How to Ensure Your Term Insurance Claim Is Not Rejected?


Ensuring that your term insurance claim is not rejected requires adopting proactive measures and ensuring careful adherence to the terms and conditions of the policy. Here are some key points to keep in mind for ensuring a successful and smooth term insurance claim settlement:

1. Disclose your medical history

Medical history forms a vital parameter for the issuance of term insurance as the coverage and premium of the term plan are decided on the medical history of the policyholder. To avoid claim rejections, provide complete information about your pre-existing health conditions, and medications. Maintain regular health checkups and promptly report to the insurer any instances of changes in your medical condition. You must also disclose your lifestyle habits if any, such as alcohol habits or smoking to maintain transparency and ensure smooth claim settlement.

2. Provide complete and correct information

Fill your application with complete, accurate and updated details. Ensure to check your application meticulously. You can also seek guidance from your insurer if you need any clarification on any aspect or terms of the policy. Communicate and update any changes in the details provided to the insurer promptly as and when occur. Open and consistent communication with your insurer helps you to smoothly process your claim.

3. Nominee details not updated

Not having an updated nominee may cause hassles at the time of claim settlements. In the absence of a nominee, an insurance company shall pay out the claim, according to the Indian Succession Act, 19252. Hence, ensure to regularly review and update your nominee details.

4. Ensure that your policy remains active

Keeping your policy active is one of the prerequisites to enjoying coverage. Ensure to make timely payments of your premiums, set reminders or authorise automatic payments to avoid unintentional lapses which can jeopardize the benefits.




Preventing term insurance claim rejections demands upfront disclosure and honesty, ensuring timely adherence to payment obligations, and getting a clear grasp of the terms and exclusions of your policy. By staying vigilant and maintaining transparency you can enjoy a hassle-free and swift claim experience when it matters the most.




● How to prevent claim rejection due to non-disclosure?

To prevent claim rejection due to disclosure, provide all material and relevant information to the insurance company when you are buying the term insurance policy. Also, if you are reviving a lapsed term plan, inform the insurance company about any changes in your lifestyle or health conditions which might affect your mortality risk.

● Can I appeal if my claim is rejected?

You can make an appeal to the insurance company if your claim is rejected. Know the reason for rejection and approach the grievance redressal cell of the insurance company. If you are unsatisfied with the insurer’s resolution, you can also approach the insurance Ombudsman and appeal rejection.

● What should I do if my claim is rejected?

If your claim is rejected, find out the reason for the same. If the reason is something that can be resolved, seek a resolution. For instance, if your claim is rejected due to incomplete documents, you can submit the pending documents and get the claim settled. However, if the reason is something for which no resolution is available, the chances of claim settlement will be less. For instance, if your policy was lapsed, no claim would be payable under it and you wouldn’t be able to get a claim settlement. For other reasons, you can raise a dispute with the insurance company.




Information Gathered from


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~Tax benefits as per prevailing Income tax laws shall apply. Please check with your tax consultant for eligibility.

The above information is for general understanding and is meant to educate the general public at large. The reader will have to verify the facts, law and content with the prevailing tax statutes and seek appropriate professional advice before acting on the basis of the above information. 


*Tax benefits as per prevailing Section 10(10D) and Section 80C of the Income Tax Act shall apply. You are requested to consult your tax consultant and obtain independent advice for eligibility before claiming any benefit under the policy.

~Individual Death Claim Settlement Ratio for FY 2023-2024

1Premium Holiday has to be selected at inception to avail this benefit and also depends on other policy terms & conditions

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%%Above illustration is for Bajaj Allianz Life eTouch- A Non Linked, Non-Participating, Individual Life Insurance Term Plan (UIN: 116N172V03) considering Male aged 25 years | Non-Smoker | Policy Term (PT)– 30 years | Premium Payment Term (PPT) – 30 years | Sum Assured opted is Rs. 1,00,00,000 | Online Channel | Standard Life | 1st Year Premium is Rs. 6,238. 2nd Year onwards premium is Rs. 6,659. Total Premium Paid is Rs. 1,99,349 | Medical Rates | Yearly Premium Payment Mode | Death benefit opted is lumpsum payout and monthly installments (Lumpsum Payout Percentage : 45, Income Payout Percentage : 55) | Premium shown above is exclusive of Goods & Service Tax/any other applicable tax levied, subject to changes in tax laws, and any extra premium and is for illustrative purpose only. This is inclusive of all the discounts mentioned above.

##Tax benefits as per prevailing Section 10(10D) and Section 80C of the Income Tax Act shall apply. You are requested to consult your tax consultant and obtain independent advice for eligibility before claiming any benefit under the policy.Above Tax benefit is calculated considering deduction of Rs. 150,000 and applicable tax rate of 31.20%.

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