Top 5 Challenges People Face While Making Insurance Claims and How to Avoid Them

The Indian finance market was valued at $131 billion in 2022 according to the Government of India’s InvestinIndia portal. Despite being the 11th largest finance ecosystem in the world there’s still a huge gap between what people truly need and what’s being offered by insurance companies. While buying insurance is as convenient as snapping your fingers, people face a ton of challenges while making insurance claims. And this begs the question.

Why is it so difficult to make insurance claims?

Lack of awareness around the process and the absence of dedicated infrastructure for claim assistance are some of the primary ones. Our conversation today highlights these challenges from the lens of a policyholder and offers some actionable tips to tackle these challenges.

So let’s dissect these challenges one at a time and then move on to the tips.

Real-Time Challenges People Face While Making a Claim

While there may be outliers, here are the 5 common challenges you might face while making insurance claims.

1. Non-Clarity on Necessary Documentation

The following are the documents required to make an insurance claim:

Life Insurance- Claim intimation proof, claimant’s documents(birth certificate, ID, Income proof), claimant’s statement, original policy document, death certificate, police FIR, post-mortem report(in the event of accidental death, certificate record of doctors and hospital involved in treatment, advance discharge form, and additional documents as per company requirements.

(This list is reported by the Life Insurance Council and notice how the list is non-exhaustive)

Health insurance- Claimant’s documents, original policy documents, medical bills, prescriptions, discharge summary, reimbursement form, medical records, and some additional documents as per company requirements. (This list is offered by iffcotokio.co.in, and notice how this too is a non-exhaustive list)

The insurance company might ask for additional documents while making an insurance claim so you can never be sure that you have all the documents before making a claim, making the process much harder for the claimant.

1. Lack of an online infrastructure for making insurance claims

Part of the reason why making an insurance claim is an intimidating proposition is that there’s no dedicated online infrastructure to facilitate seamless claim processing. Despite having tremendous growth over the past couple of decades, there have been marginal investments in the online infrastructure supporting the financial behemoths, even today most people have to visit local offices for collecting reimbursement forms, submit documents, and register an intimation report.

With access to a state-of-the-art online payment gateway like UPI(Unified Payment Interface) and a central online repository like Aadhar to track citizenship, it’s not that we’re not capable of developing a dedicated infrastructure to facilitate seamless insurance claims. We’re lacking on the initiative front. A Web3-based startup called AfterLife facilitating afterlife planning is the closest thing to a dedicated online infrastructure for claim assistance, allowing users to solve claim disputes conveniently.

1. Lapsed Policies

We’re often so consumed in the monotone of our daily schedule that we forget about some important things like our insurance policy premiums. Now at that moment, it doesn’t seem like you’ve missed much, because the monotone overpowers our sense of ephemerality. And when people miss one too many policy premiums, they end up with lapsed policies.

And this is all under the covers, until the very moment you need it the most. Lased policies are one of the biggest reasons for claim rejection in India. Therefore, it’s imperative that you make sure you are regularly updated on the status of the policy and proactively participate in its renewal.

1. Contestability Period

There’s a section called the contestability clause which you have to sign while buying an insurance policy and it’s embedded right in the middle of the insurance policy papers. It states that if a person dies within a certain period of buying an insurance policy, the claim can be rejected by the insurance company.

There have been quite a lot of unfortunate incidents where the policyholder has died within the contestability period and the claims have been rejected by insurance companies leaving the claimant with disappointment and a new set of challenges.

1. Inaccurate or Missing Nominee Details

Insurance companies can and will reject insurance claims in the event of incorrect or outdated nominee details. Often people buy insurance policies at a young age and name their parents as nominees, but what if they outlive their parents and forget to update the nominee details with the insurer?

This happens far too often and people end up with rejected claims due to this. So make sure you update your nominee details regularly and double-check the veracity of your nominee details because false/incorrect nominee details can also result in rejected claims.

Actionable Tips to Avoid Claim Rejection

Now that the prospect of your claim being rejected seems more realistic, let’s see how you can prevent that from happening. Here are some actionable tips to avoid claim rejection:

• Be extra cautious with nominee detail validation and updation

• Always verify the legitimacy of your documents when buying a new insurance policy

• Make sure to pay your premiums on time and in case you miss the due date ensure, ensure clearing the late

• Closely monitor your policy expiration and ensure renewal of policy in due time

• Never conceal any information that has a direct impact on your health from your insurer

• Never allow your insurance agent to fill your policy papers for you, read thoroughly and do it yourself.

• Have your policies audited through AfterLife to understand any discrepancies and fix them immediately.

Conclusion

The challenges around claim assistance restrict the operative support the insurance industry can offer to the Indian economy. But it also poses a more tangible problem that I’m sure you might’ve witnessed/ heard of in your social sphere. The pain inflicts upon families during tough times when they need support, and this needs to be worked upon.

That’s exactly why the efforts of AfterLife to simplify insurance claims are worth mentioning. As a platform, AfterLIfe facilitates seamless claim redressal by leveraging its network and expertise in the field, and that’s commendable, to say the least. If you’re struggling with one of your insurance claims, or you know someone who is, you can visit the AfterLife website and get your claims resolved pretty conveniently.