The ultiÂmate objective of any Life insurance is that the family shall get much needed protection in case the policyholder dies before the maturity of the policy. Here we shall discuss the procedure for settlement of the benefits of life insurance.
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Maturity Benefit
If the policyholder lives through the duration of the policy and becomes eligible to get the maturity value it is called the settlement of a maturity claim. As the policyholder is alive, the nomination is of no significance. Age is normally admitted at the stage of the proposal.
If it has not been admitted for some reason, it is necessary to submit the age proof before the payment of the maturity value.
Much before the date of maturity, the insurer sends the claim discharge voucher which has to be returned duly signed and witÂnessed along with the policy document for payment of the maturity value. An agent would do well to call on the policyholder to help him to complete the process and thereby earn his goodwill, and may be further business.
Death Claim
In case of the death of the policyholder at anytime during the duration of the policy, the claim amount becomes payable to the nominee mentioned in the policy document. The nominee or the nearest relative shall send an intimation of death of the policyÂholder to the insurer stating therein the fact of death, the date of death, cause of death and the place of death along with the policy number.
Insurer deals with the death claim differently on the basis of the duration or the policy. If the policyholder has died within two years of the commencement of the policy, i.e., acceptance of risk which may be different from the date of commencement & if the policy has been dated back it is treated as “early or premature claim” and if the death has occured after 2 yrs of the commencemant, it is treated as normal death claim.
In a normal death claim, that is if the life assured has died after two years of the commencement of risk, the insurer, on being intimated about the death of the policyholder, calls for the age proof, if not earlier admitted, the original policy docuÂment and proof of death.
The proof of death can be a certificate from the municipal authorities under which cremation has taken place, or other local body like death registry. The claimant generally is required to fill in a form giving certain routine informations about his title to the policy money and the information relating to death, which is normally called a claimant’s statement.
Premature claim
It is a premature claim if the death has occurred within two years from the commencement of the policy or the date of last revival, or medical examination. The insurer takes certain precautions before making payment under such a premature claim.
It wants to satisfy itself that it is a genuine case,  i.e., the correct policyholder has died and that the cause of death does not go back to a date prior to the commencement of the policy. The duration of last illness is of vital importance to eliminate any fraudulent intention. Last medical attendants’ certificate, hospital report, burial certificate, employees’ leave record, if he was an employee in a reputed firm etc, are the different records examined and normally a senior officer is deputed by the insurer to make on the spot investigation, through neighbours, colleagues or doctor of the locality.
As the revival of the policy is a do novo contract of insurance, the insurer would like to verify whether the statement contained in the declaration of good health given at the time of revival is correct.
If such a statement is proved fraudulent relating to a material fact, the claim, may be rejected. Life insurance is a contract of utmost good faith and good faith has to be observed, not only at the time of the proposal, but also at the time of the revival of the policy whenever it is done.
In case there is a rival claimant to the insurance money, the insurer can get a valid discharge by paying to the nominee. The rival claimant can approach a court of law which may order stop payment till the case is finally disposed of.
However if there is no nomination under the policy, the insurer shall await a valid title through either a will or a probate as a letter of administration or a succession certificate. It may take quite sometime to get such certificate from the court and in the meantime the family may suffer.
A good agent therefore shall ensure that there is a valid nomination or assignment. If there is an assignment, the policy money is paid to the assignee. If there is a reassignment of the policy, it is necessary that a fresh nomination is done, as assignment invalidates the existing nomination. However, if there is a nomination in favour of the insurer for taking any loan, the nomination is said to be unafÂfected subject to the claim of the insurer.
If the premature death has been due to an accident, it is necesÂsary to get a police inquiry report in lieu of the attending physician certificate. Suicide, if it has taken place within one year of the beginning of the risk, exempts the insurer from the liability of the payment of the claim. The propensity to commit suicide is a moral hazard and is not expected to continue beyond one year.
If the policyholder disappears and he has not been heard of for 7 years by those who would naturally have heard of him, if he had been alive, he is presumed dead as per Sec 108 of the Evidence Act 1872. However, it is necessary to keep the policy in force during this period by payment of the due premiums on the due dates.
Copyright: Life Insurance Agents Guide published by The Insurance Times, Kolkata
