Insurance is an important part of personal finance, especially after the COVID-19 pandemic, when people are choosing life insurance and health insurance to avoid any risk. Insurance can be defined as a contract between an insurance policyholder and an insurance company that secures the finances of beneficiaries and their family members in emergencies. The company undertakes the guarantee to provide compensation for specific losses, illnesses, or deaths in return for the premium paid.
Nowadays, almost everyone has some form of insurance cover. Though the process to claim the insurance might get complicated and people might make some minor mistakes that might lead to a lower payout or rejection of the claim. Let’s take a look at some mistakes which you should avoid while taking an insurance policy:
False information
If you provide any invalid or false information while claiming insurance, it might lead to the rejection of your claim. Providing accurate information regarding health, age, income, height and weight is crucial. It is always suggested to be honest while claiming insurance as it makes the process smooth and easy.
Contestability period
The contestability period often lasts for two years after you secure your insurance policy. The insurer reviews your application and covers the misrepresentations. Inaccurate information may lead to the rejection of your claim. If, during this period, the insured individual passes away, the company investigates the information provided in the policy application form.
Non-payment of premium
A certain amount of premium must be paid by the insured individual at regular intervals to avoid the policy becoming null and void. Usually, the insurance company allows a 30-day grace period for payment. Even after the grace period, if the insured individual fails to pay the premium, the claim will be rejected.
Absence of nominee
Nominees in insurance play a vital role in processing insurance claims. Usually, a secured individual names their parents as nominees, but if the nominated individual passes away, the insurance claim may be rejected if you don’t update your nominees’ name. To avoid any complications, it is important to update your nominee’s details on a regular basis.
