Term insurance claims are scrutinized carefully by life insurance companies, especially if death occurs within the first three years of the policy (known as early death claims). Honesty during proposal submission is essential. Hiding personal habits like smoking or drinking to secure a lower premium can lead to claim delay or complete rejection.
The Demise and the Early Claim
A 38-year-old corporate manager purchased a term insurance policy of ₹1.5 Crore. On the proposal form, the manager declared themselves as a non-smoker. Two years later, the manager suffered a sudden heart attack and passed away. The family filed the death claim. Since it was an early claim (within 3 years of policy inception), the insurer initiated a mandatory investigation.
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The Medical Records Investigation
The investigator collected the deceased's past hospital consultations and medical registers. A doctor's consult note from three years prior to the policy purchase explicitly recorded 'patient is a heavy smoker for 10 years.' The insurer put the claim on hold, requesting clarification from the family. While the claim was not rejected immediately, the family faced a 12-month delay in receiving the payout, adding emotional stress during a difficult period.
- Always declare your smoking, drinking, and chewing habits honestly on the life insurance proposal form.
- Remember that non-disclosure of health habits is classified as material misrepresentation and can cancel the policy.
- Under Section 45 of the Insurance Act, an insurer cannot challenge a life policy after three years, but early claims undergo strict scrutiny.
- Ensure your nominee details are updated and they have access to your policy document and premium receipts.
