The Fine Print behind 24 hour Claim Settlement Guarantee
Most of us have one key emotion when looking for term insurance - "I am fine paying extra, but I want my family to not face any hassles or running around during claims." So when you are looking for term insurance plans and see that there is a Claim Settlement Guarantee on offer- it does catch your eye. But, but you also start thinking - How does this work actually? Is this too good to be true? What is the fine print behind this promise?
Don't worry - our team did the hard work and we have concrete answers 😎
Firstly, let’s look at a typical claim settlement process.
If you die during the term of the policy, your family needs to get in touch with the insurance company and initiate a claim settlement process. You will need to submit a few forms, and a set of documents to begin the claims process. Once the forms and documents are verified, they may either approve the claim and make the payment - mostly a transfer to the nominee's bank account, or decline the claim. This process could take anywhere from a few days to a few months to complete, and money transferred to your nominee’s bank account.
What is promised in a One-Day Claim Settlement?
Many who buy a term life insurance policy are anxious about the settlement process, and whether their family will have to run around, follow up, face hassles when making the claim. To assure term insurance buyers of a hassle-free experience, Insurers are offering a guaranteed timeline to settle the claim within a time period. Most insurers offering this guarantee promise 24 hours (one-day), some even promise the claim settlement in a few hours.
Here’s a snapshot of the time-frame for claim settlement guarantees offered by some of the popular life insurance companies.
|Insurance Company||Time-frame for Claim settlement guarantee|
|Max Life||1 Day|
|ICICI Pru life||1 Day|
|HDFC Life||1 Day|
|Aegon Life||1 Day|
|TATA AIA||4 Hours|
|Canara HSBC||1 Day|
|PNB Metlife||3 Hours|
Source: Policybazaar & Insurer websites
You must note, that not all term insurance plans by every insurer, offer this guarantee. You should check with your insurer whether the guarantee is applicable for the policy you’re interested in - even before making a purchase.
Plus, even when the guarantee applies, there is a long list of terms and conditions for this to be valid. You must educate yourself about all of this before you consider this as a unique benefit to choose a policy.
7 things you should know about this guarantee:
1. There’s a limit on the cover amount: Every insurer has a different maximum cover amount, up to which they will provide the claim settlement guarantee. If your claim amount is higher than that, the feature won’t be valid. (Especially if you choose an increasing cover, you should be wary of these limits that might come into effect in the future, as the sum assured grows.)
Here’s a quick view of the cover limits imposed in some of the popular term insurance products.
|Insurance Company||The highest sum assured for which claim settlement guarantee applies (INR)|
|Max Life||1 Crore|
|ICICI Pru Life||1.5 Crores|
|HDFC Life||2 Crores|
|Aegon Life||1 Crore|
|TATA AIA||50 Lakhs|
|Canara HSBC||1 Crore|
|PNB Metlife||50 Lakhs|
Source: Policybazaar & Insurer websites
2. Applicable only after the policy has finished a certain number of years: This is an important condition you must not ignore. The claim settlement guarantee will be applicable for many insurers only if the policy is in force for a particular number of years. If your policy has not completed a certain number of years, and you die - this guarantee would not be applicable. For instance - Max Life, ICICI Prudential, HDFC Life, etc. require 3 years of the policy being in force before the guarantee is valid.
3. Lapsed and revived policies are not covered: In most cases, insurers require that all your premiums are paid on time, and the policy should have never lapsed and revived. If it did, this feature wouldn't apply.
4. Only valid for ‘standard claims’ without any investigations: The guarantee only applies when the claim does not require any investigations (medical, legal, etc.), additional document submissions, legal procedures, etc. This is true across most plans and insurance companies.
5. Mandatory document submissions: Some insurers insist that all the mandatory documentation must be submitted at the time of claim intimation itself. The list can vary across insurers, but here’s an indicative list. The time-guarantee only begins after your nominee submits all the required documents.
|Normal death||Accidental death|
|Original policy certificate||Original policy certificate|
|Copy of death certificate by the local authority||Copy of death certificate by the local authority|
|Nominee’s current address proof||Nominee’s current address proof|
|Photo identity proof||Photo identity proof|
|Cancelled cheque||Cancelled cheque|
|Copy of bank passbook||Copy of bank passbook|
|Copy of medico-legal cause of death||Copy of medico-legal cause of death|
|Medical records (Admission notes, Discharge / Death summary, Test reports, etc.)||Medical records (Admission notes, Discharge / Death summary, Test reports, etc.)|
|Copy of FIR|
6. The specific time limit for document submission: Most insurers want the documents in before 3 PM on a working day. If your nominee misses submitting any documents for whatever reason, then the claim processing will only be initiated on the next day.
A couple of insurers - Tata AIA and PNB Metlife offer a same-day claim settlement, but you’ll have to submit all mandatory documentation before 2 PM on the same working day for this to be valid. If some of the documents are not available, then the evaluation of the documents will only be done on the next day.
7. Not applicable to all products: Not all policies from every insurer who advertises the claim-settlement guarantee, are covered by this benefit. You should carefully check the details for the policy you pick if this feature is important for you.
These are the standard terms we were able to dig into - the set of terms and conditions valid for your policy depend entirely on the respective insurer. Therefore, it is important that you go through all the fine print in detail, before selecting a policy.
What happens if my claim is not settled within the promised time?
For an eligible claim, Insurers compensate by paying interest on the claim amount for every day of delay beyond the guaranteed timeline. Here is what a few insurers have mentioned on their website. We weren't able to find this information from all insurer websites.
|Max Life||As per bank rate|
|ICICI Pru life||As per bank rate|
|HDFC Life||6.25% per year|
|Aegon Life||As per bank rate|
|TATA AIA||Not mentioned|
|Canara HSBC||Not mentioned|
|PNB Metlife||Not mentioned|
What’s the Beshak take?
A quick claim settlement is an enticing prospect to think about. It indicates that - should you pass away, your family will immediately get access to financial resources to keep them going, without any hiccups. While insurers have tried their best to provide a great benefit, unfortunately, it is riddled with many conditions - so you should take this benefit with a pinch of salt.
How YOU can ensure your family will get a smooth guaranteed claim settlement?
Here’s what you should do to ensure your family does not have to sweat or run around during the claim settlement:
- Always fill proposal forms accurately and honestly, including your medical history, lifestyle habits to the best of your knowledge - so the insurer doesn’t have to do any investigation at the claims stage.
- Ensure that you put a standing instruction / auto-debit to pay your premiums on time so that the policy doesn’t lapse (and continue to be eligible for the claim settlement guarantee)
- If married and male, ensure you fill the Married Women’s Property Act addendum, at the time of taking the proposal, so the claim is directly paid out to your wife.
- Take your family through your proposal and claims process, including the list of the mandatory documents - so they can submit documents properly when the time comes
- Keep your e-Insurance account updated with all your details, and give your nominee access to this information.
If you have any questions you can post a query in the comments below or on our forum, and get answers from insurance experts in 6-8 hours.
👉 Insurers are making a Claim Settlement Guarantee, that your term insurance claim will be paid in a less as 4 hours or 24 hours⏰
👉 But, to be eligible - the claim will need to fulfil several terms and conditions 📑
👉 If the guaranteed time passes, the insurer will pay your family an interest on your claim amount 🤑
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