Wednesday, April 27, 2011

Insurance Claims Process - Simplified

Before we begin on how to get your insurance claims easily, we need to cover the basics of what insurance is and things like that. But, you probably know what Life Insurance is, what it is used for. And if you are one of the few who are not aware of the same, don’t worry. I have already written a few articles on what Life Insurance is, what Health Insurance is, etc. Click on the links below to read about them.

1. What is Insurance
2. Life Insurance - Policy Lapse and Renewal
3. Do you have Health Insurance

Ok, now lets get down to business.

What is an Insurance Claim?

An Insurance Claim is an act wherein, a person who is insured or a person who is the next of kin to the insured contacts the insurance company to get some money due them.

For ex:

1. In case you had a serious health condition due to which, you were hospitalized and had to spend 1.5 lakhs of rupees from your pocket. But, the good news is, you have a health insurance policy, so you can claim the expenses from the insurance company. So, you will fill up a form and submit all documents for the medical expenses to the insurance company. The company will process your claim and settle you the money you spent in the hospital.

2. In case a colleague of yours died in an accident and left his wife and child behind, you will feel sorry for the family. The good news here again is, your company has a group life insurance policy and he is insured for Rs. 50 lakhs, just like you and your other colleagues. So, you call up the wife and explain her the same. She contacts the insurance company, fills up forms and submits proof of death of her husband. The insurance company validates the documents and releases the payment of 50 lakhs to her, which she can use to educate her child and take care of herself until her child grows up.

Now we know what an insurance claim is. Next you might ask me, why is this important?

Why is the Claim Process Important?

It is important because, after a person who had life insurance dies, his family is due some money from the insurance company. So, the simpler the claim process is, the better it is for the family.

Imagine, under scenario 2 in the above paragraph, what if the insurance company rejects the claim of the woman, whose husband just died in an accident and she has to take care of her child as well. It would be bad, wouldn’t it?

This is exactly why the claim process is very important. People get insured to help out their family members even after they are dead and if the insurance company doesn’t settle the claim, the purpose of taking the insurance policy gets defeated. Right?

How to have a Smooth Claims Process?

Insurance companies reject claims all the time. Some more than others. So, to have a smooth claims process, you need to ensure the following when you purchase the insurance policy:

1. Filling up the form
Many people like you and me, may allow the insurance agent to fill up the forms and then complain about not known all the details of the policy. To avoid after-sale shocks, it is recommended that you fill up the form yourself. Also ensure that you get a copy of all the documents you submit. Make sure that you cross-check the details submitted and if you find any discrepancy, you can cancel your policy within 15 days of receiving the documents.

2. Quality of Documents
Always make sure that you submit original/genuine documents to the insurance company. All your details will be validated based on the documents submitted by your survivors. And if you submitted any incorrect documents while buying the policy, the insurance company may reject the claim.

Stating the correct age, date of birth, educational qualifications is very important.

3. Health Related Disclosures
Always make sure that you disclose all your health details correctly. Never hide anything. Insurance companies don’t mind selling policies to people who may have certain health conditions, but they would gladly reject the claim if they find out that the insured person had some disease and hid the fact when the policy was sold.

4. Nominee Information
Make sure you nominate your spouse or parents as your nominee in the insurance policy. They are the only people who are authorized to get the payments on our insurance policy after our time. If there is no nominee, the insurance company might delay or reject claims, so we must ensure that we nominate someone as the nominee for our policy.

Last but not the least, make sure, you pay your insurance premiums on time and everytime. People who pay their premiums on time, have a better chance of getting their claims settled than the ones who default on their premiums.

What is Claim Settlement Ratio?

Claim Settlement Ratio refers to the % of claims settled by an Insurance Company against the number of claims submitted.

For Ex: If 100 people submit claims and the company pays 80 of them, the Claim Settlement Ratio is 80%

Why is Claim Settlement Ratio Important?

It is important because, the higher the claim settlement ratio of the insurance company from which you take the policy, the better are the chances of your family getting paid in case of any mishap.

Which Insurance company in India has the best Claim Settlement Ratio?

Well, this is a tough one and I was able to find some details as of the year ending 2010 in the internet. Am not sure, how accurate they are, but these are the numbers.

And the Winner is LIC of India with a 96% Claim Settlement Ratio


Other Insurance Cos with High CSRs:

1. HDFC Life – 91%
2. ICICI Prudential – 90%
3. Birla Sun Life – 89%
4. Reliance Life – 89%
5. ING Vysya Life – 89%
6. Bajaj Allianz – 88%
7. Aviva Life – 87%

Note: All these figures are for death claims on life insurance policies

A Last Word:

Dont get upset or distressed if the insurance company rejects your claim. If you feel unsatisfied with the reason the company gives for rejecting your claim, you can always contact the Insurance Ombudsman or the Consumer Court to address your problem.

Happy Insurance Claims!!!

3 comments:

  1. Do you have a facebook fan page? I looked for one on twitter but could not discover one, I would really like to become a fan!

    ReplyDelete
    Replies
    1. https://www.facebook.com/pages/Anands-Banking-Finance-Blog/158868550878386

      Delete
  2. @ Nikhil

    my twitter id is anandvkumar. and I dont have a facebook fan page. :)

    ReplyDelete

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