Settlement of Life Insurance Claims

• Preface
• Meaning and definitions of claim
• Conditions before claim
• Circumstances for Settlement of Life Insurance Claims
• Compassionate or ex-gratia claim payment
• Proof of ownership,

Settlement of claims means payment of Sum Assured as per the terms of the letter of insurance. Settlement of claims is an important prerogative of the insured in case of full term and of his heirs or nominee in case of death claims. This is an important function of Life Insurance Corporation. Quick and convenient settlement of claims helps in growing the future life insurance business of the Corporation. Timely settlement of claims increases customer satisfaction and makes their savings available for national schemes by purchasing insurance papers.

Life Insurance Corporation of India believes that the proof of its success lies in timely settlement of claims to the customers. The insurance agent has a specific role to play in the settlement of claims. Insurance agents can do this service properly only when they provide timely information about changes in the address of their customers – policyholders to the corporation office and get the age of the insured approved. This role of his helps the corporation in speedy settlement of claims.

The final stage of letter of insurance starts with the process of settlement of claims. Generally, all life insurance papers have to be paid at some point or the other. Sometimes this payment has to be paid at the end of the term of the policy, sometimes on the death of the insured, sometimes on the retirement of the insured, sometimes on the occasion of marriage or education expenses. In the present chapter, various aspects related to settlement of claims of insurers have been discussed.

The right to demand what is due is called claim. A claim under insurance refers to the rights that the insured enjoys under a contract of insurance. In other words, under the life insurance contract, the amount due to the insured by the insurance company on the occurrence of an event is known as claim.

A claim is a demand to fulfill the rights which the insured gets under the insurance contract. Different scholars have given the following definition of claim –

According to Angell, the word claim can be used for all those payments made by the company whether due to loss, maturity or voluntary surrender.

According to “Federation of Insurance Institutes of India” a claim on a letter of insurance is a demand to perform an undertaking given by the insurer while entering into an insurance contract. “

It is thus clear that a claim of insurance is a demand by the insured to perform the promise made by the insurer in the contract of insurance. In other words, we can say that the insured shall accept his promise from the insurer according to the terms of his letter of insurance.

For settlement of claims, if the insured makes a claim under the contract of insurance, then that claim is of importance only if the following condition is fulfilled-

• There is a liability under the contract of insurance – Before submitting a claim for insurance, it is necessary that an insurance contract the liability of the insurer arises under According to the contract of insurance, if the insurer does not have any liability in the insured, then he does not get any benefit of filing a claim.
• Determining Liability – Not every letter of insurance has the same obligation to file a claim. Under the insurance contract, the liability is fixed at the time of taking the letter of insurance. According to the terms of the insurance contract, settlement of the claim is possible only when the liability is covered under it.In short, the extent and nature of liability should be determined before submitting an insurance claim.
• The insured has fulfilled his promise – Before submitting a claim for insurance, the insured should see whether he has fulfilled his promise as per the contract of insurance. For example, payment of insurance premium, proof of age, period of insurance letter and everything should be correctly mentioned. He can also hold the insurer liable if he fulfills all his promises.
• The event mentioned in the letter of insurance has happened – In order to file a claim for insurance, the insured must fulfill the condition that the event mentioned in the letter of insurance has happened. It is mentioned in the insurance letters that the sum insured will have to be paid after a certain period. Sometimes Sum Assured is payable only on death during the Sum Assured. Occurrence of the event of survival or death of the insured must be mentioned in the letter of insurance.
• The claimant has the right to claim – the same person can claim the insurance. Who has the right to present the claim. Before paying the claim, the insurer should ascertain from the records such as nomination papers, signatures, etc. whether the person presenting the claim is entitled to claim or not. The claim should be accepted only after being completely satisfied.

1. Payment of Claim on Maturity – In a life insurance contract, if an insurance policy matures in accordance with the terms of the letter of insurance, the insurer becomes liable for its payment. The procedure for paying the claim amount to the insured on maturity of the insured is quite strict. The following procedure is generally followed in settlement of maturity claims.
2. Payment of claim on death – When the death of an insured person occurs within the period of insurance, then his insurance policy cannot be paid to the insured. In such a case, the letter of insurance can be paid to the nominees, the heirs of the insured. But the insurer should be careful in such a situation and make the payment to the right person. For settlement of death claims the claimant has to fulfill the following requirements.
   • Intimation of death – The person submitting the claim of the sum assured should inform the death of the insured in the branch office of the corporation. In this information, the name of the deceased person, date of death, place of death due to death and number of the insurance letter, etc. must be mentioned.
   • Submission of Claim – After the death of the insured, the heir or the nominee of the insured can submit a claim for insurance. To submit a claim, a claim form has to be filled.
   • Submission of Required Forms – Along with the claim form, necessary forms have to be submitted. Those forms are as follows –
     • insurance letter
     • If the insurance letter is signed, then the signature document
     • Certificate of age
     • Certificate of Death
     • Doctor’s certificate
     • Certificate of Hospital
     • Certificate of funeral
     • Employer’s Certificate
   • To prove the claim – In order to prove the right of claim, necessary forms and proofs have to be submitted. In different circumstances, the right of claim has to be proved on the basis of different evidences.
   • Necessary investigation to be done – If a claim for sum insured is submitted in the Corporation’s office, the Corporation conducts necessary investigation into the cause of death of the insured. If at the time of death of the insured even two years of issuance of the letter of insurance is not completed, then the corporation investigates more carefully.
   • Calculation of claim amount – The corporation calculates the claim amount after being satisfied with all the information about the rightful heir of the insured and the documents provided by him. Declared bonus is added while computing the claim amount but the unpaid amount of premium is deducted from the total amount. If there is a loan on the letter of insurance, interest payable on it, etc., then it is also deducted from the claim amount of the insurance. If the letter of insurance is with accident benefit, then the amount of accident benefit is also added to the claim amount. goes . In this way the corporation calculates the net claim amount.
   • Getting the payment form to be signed – After calculating the claim amount, the corporation prepares a check for the claim amount and also prepares the payment compensation form. Along with giving the check to the claim officer, the compensation form is signed by the claim officer. In practice, along with the claim work, the compensation form is signed in advance.
   • Get the signature certified – The signature of the claim officer is got certified on the compensation form. The agent of the certified corporation or a member of the club above it can get the signature done by the Block Development Officer or Gazetted Officer or Magistrate.
3. Payment of claim in case of suicide – If the insured commits suicide within one year from the date of commencement of the risk under the letter of insurance, then the insurance letter is canceled and no liability arises on the insurance company. But if the insured commits suicide after one year, the insurance corporation is liable to pay the sum insured to the heirs or nominees. The mode of payment is the same as for the payment of death.
4. Payment of claim on the death of the nominee – Any insured can give the right to the amount of the letter of insurance after his death to any person. The person to whom the insured gives this right is called the nominee. The life insured can also nominate more than one person for the same sum insured. As per Section 39 of the Insurance Act of India, 1938, the rights of the nominee are as follows-
   • Payment to the Nominee on the Death of the Insured – If the Life Assured himself is alive, the Nominee cannot claim the Sum Assured. The claim of insurance to the nominee is paid only on the death of the insured.
   • Death of the nominee before the maturity of the letter of insurance – If the nominee dies before the maturity of the letter of insurance, the amount of the claim of the letter of insurance will be paid to the insured (if he is alive) or to the heirs of the insured or his legal representative. is done . The successor of the nominee is not entitled to receive the payment of the claim.
   • Payment of claim in case of survival of one or more of the nominees – If one or more of the nominees is alive after the death of an insured, the surviving nominees have the right to receive the balance amount paid on the letter of insurance. Will happen .
   • Death of the nominee before payment – If the nominee dies before the payment, the heir of the nominee does not have the right to receive the payment of the sum assured. After the death of the nominee, only the successor or statutory heir of the nominee has the right to receive the claim amount. It is clear from section 39 of the Insurance Act that the nominee is only the agent of the insured who receives money on behalf of the insured but there is no ownership of the nominee.
5. Claim by minor – The minor gets the right to pay the claim in the following situation. A minor can be a nominee of the letter of insurance but does not have contractual capacity. He cannot make a valid indemnity for the letter of insurance. If the insured dies during the minor period of the nominee, the insurer can refuse to pay the same. Therefore, at the time of enrolling the letter of insurance, the insured also has to appoint an adult who can receive the payment on behalf of the minor nominee. Section 39 of the Insurance Act, 1938 empowers the insured to appoint such person.
6. Claim by lunatic person – According to section 11 of the Indian Contract Act, a person of unsound mind does not have the capacity to contract. He cannot be held liable for the performance of the contract. According to the Indian Insanity Act, 1913, if any lunatic person makes a contract, then the contract made by him is void. If a person becomes insane after getting the insurance done, he cannot make a valid reimbursement of the insurance letter. Therefore, the insurer pays the claim of the insane person only to the person appointed by the court to look after the property of the insane person.
7. Payment of Insolvency Claims – When a person is declared bankrupt by a court, his insurance claims cannot be paid to the insolvent person. If an insured is declared insolvent under the Bankruptcy Act, then his claims will be paid to the state undersigned or the state recipient, but the insured has the right to claim the letter of insurance as a trustee, then by receiving the money of the insured himself, the trust will be maintained. can. This money cannot be taken by the state beneficiary or the state signatory.

Generally, the Life Insurance Corporation pays only those claims to the claimants which are in accordance with the rules and for which there is a statutory responsibility, but sometimes the corporation pays such claims which are ex-gratia, for which the corporation is not legally responsible for payment. Is . Such claims are called ex-gratia claim. The payment made for these claims is called ex-gratia claim payment. The Corporation pays the claims sympathetically in the following cases –

1. When the claim period has been barred – If a claimant does not submit a claim to the Corporation within three years of the claim becoming due, the claim becomes lapsed or a period barred claim . In such case the claimant cannot compel the corporation to pay the claim but the corporation can pay the claim sympathetically.
2. If the contract is canceled – If the insurance contract is canceled due to any legal deficiency like lack of insurable interest, suppression of material facts etc., then no legal rights of the insured under the insurance contract are created. In such a case also the insurer can pay the whole or part of the claim of the insured sympathetically.
3. Due to the status of the letter of insured – the conditions of any insured are not fully complied with such as the last installment has not been paid. In such a case the liability of the insurer ceases to be legal. In practice it is not fit for the insurer to not pay the claims of such letter of insurance. The insurer may also make partial payment of such claims.

The claimant has to produce his proof of ownership in order to receive the payment of an insurance claim. The claimant can prove his ownership on the basis of any of the following documents.

1. Nomination – Any person can mention the name of the nominee in the form at the time of getting the insurance done. The format of nomination paper is given in section 39 of the Insurance Act 1938. The insured should write in this format on the back of the letter of insurance. If the insured has written the nomination paper on a separate paper, then it is not considered valid but if there is no space for filling the nomination in the insurance letter, the insured should be asked to sign the nomination paper at the four corners of a blank paper and write the nomination paper on it. Should be glued together.
2. Signature – The handwriting document is considered to be an important proof of ownership. The underwriting note can be written on the insurance paper or on a separate document. Such a document should be signed by the signatory as well as attested by the witness.
3. Trust Document – Under the Trust Act, trust is generated by writing a trust document. The trustee can prove the ownership of a claim of insurance by producing a trust deed.
4. Testament – A testament is a written proof of declaration of the will of a person. The court in which the common seal is affixed. In this document the names of those persons are written who have the right to administer the property of the person writing the will. The insurer can find out who is entitled to receive the payment of the insurance claim by looking at the will.
5. Administration certificate – Administration certificate is such a certificate which is issued under the Indian Succession Act when the deceased person has not written a will before death. The person in whose name this certificate is issued gets right over the entire property of that deceased person. This person repays the money to all the lenders and can recover from the borrowers. Such a person can get payment of the amount claimed in the letter of insurance.
6. Certificate of Succession – The certificate of succession is issued under the Indian Succession Act. The holder of such a certificate acquires rights over all the properties and eclipses of the deceased. Thus such person is entitled to receive the payment of the amount claimed in the insured.