We all know the importance of life insurance. While a life loss is a substantial loss for one’s near and dear ones, life insurance financially protects the insured’s dependents. If one has taken term life insurance, one can get a relatively large payout for a reasonable premium.
Some term insurance plans also have one more feature that can come in handy during such trying times.
The sudden loss of a family's primary earner can leave loved ones in financial distress - this is why term insurance is an essential financial protection tool. “One crucial feature of term insurance is the claim intimation benefit, which allows the deceased's family to promptly file a claim and receive an immediate sum of about Rs 1-3 lakh. This benefit helps cover funeral expenses or any immediate needs, alleviating an added financial burden during a difficult time,” says Rhishabh Garg, head - term insurance, Policybazaar.com.
Claim intimation is the first step in the claim process where the nominee or beneficiary informs the insurance company about the death of the policyholder. “This can be done through various means such as visiting the insurer’s branch, online intimation on the company’s website, or contacting them via phone or email. The purpose is to alert the insurer of a potential claim,” says Venkatesh Naidu - director, of the Insurance Brokers Association of India (IBAI) and CEO of BajajCapital Insurance Brokers.
The claim can usually be initiated immediately after the event that leads to a claim, such as the policyholder’s death. The nominee should inform the insurer as soon as possible using one of the methods provided by the insurance company.
“After intimation, they must submit required documents like a filled-out claim form, death certificate, and policy documents for verification. The insurer may take 60-90 days for additional investigation if needed and should settle the claim within 30 days thereafter,” says Venkatesh Naidu - director, the Insurance Brokers Association of India (IBAI) and CEO of BajajCapital Insurance Brokers.
So once you inform the insurance company about a claim, it may take them a while to settle your claim. What a claim intimation benefit does is that it gives you an immediate benefit of a smaller amount to meet funeral expenses and other costs. “The amount you receive gets deducted from the sum assured. For example: If you’ve bought a plan for Rs 2 crore cover, and taken Rs 2 lakh as immediate claim benefit, then your updated sum assured would be Rs 1.98 lakh,” says Garg.
This benefit is available with some insurers at the moment like Bajaj Allianz Life, Max Life Insurance, and Tata AIA Life Insurance, however owing to its customer-centric nature, more and more insurers are in the process of adding this feature to their plans.
This is how it works. “Upon filing a request, Rs 2-3 lakh out of the basic sum assured will be paid to the nominee within three working days from the claim registration date, given that all mandatory documents are submitted. The subsequent payout shall be made after the claim is approved. This feature is available after you complete one year of policy issuance,” says Garg.
