You buy insurance due to emotional factors. You want to protect your loved ones. If the claim is rejected by the Insurance Company the beneficiaries will feel cheated and they would be emotionally worse off even after having the cushion of insurance. You should also keep in mind that insurance companies are in business and businesses are not run by emotions. Insurance companies will honour your claim if they are 100% sure that claim is genuine and complete documents are received by them in time.

Why are claims rejected?

It is very difficult to generalize why claims are rejected. It would depend from case to case. However, from what we know from our experience is that the life insurance claims are normally rejected because of following reasons:

a) Policy not in force at the time of mishappening.
b) Incomplete claim documents or lack of basic documents.
c) Misrepresentation or concealment of material fact when the proposal form.
d) Suspected fraud to take claim amount.

What can you do to ensure the future claims are not rejected?

No company can deny the claim payment if your claim is genuine and documentation is complete. Agents have the tendancy or the habit of filling the proposal form on your behalf. Remember, agent will only earn commission if the policy is issued. In case policy is rejected then he will not earn any commission. Question before us is what you should do to protect your interest :

a) Complete the proposal form yourself and answer all questions fully.
b) Never forge or let your agent forge document any document such as Age proof, Salary Slips /Form 16 / Tax returns just to get higher coverage amount.
c) Never conceal medical facts at the time of medical examination for e.g. taking medication to suppress elevated BP before appearing for medical examination.
d) Most importantly read the policy document fully on receiving it.
e) Recheck the copy of proposal form that is received along with policy document and ensure that it has not been changed by the agent(which is incidentally a common practice)
f) Keep your family informed about your policy.
g) Pay the premiums on time and do not let the policy lapse.

What if the claim is still rejected?

RDA is also concerned about the claim ratio as low claim payment affects the goodwill of regulator. It has been asking the insurance companies not to reject claims mechanically on technical grounds.
You should follow the following process. The process is uniform across companies.