Payments Under A Life Insurance Policy

Chapter 16
Payments Under A Life Insurance Policy

Learning Outcomes
Types of claims Types of Claims
Claims procedure
ver. 1 – w.e.f. Aug. 16

Strictly for internal circulation only. Should not be further circulated/ used for presentation to a prospect/ general public
We learnt that Insurance is a contract
I promise you to compensate for your losses
when certain specified events occur.
Insurer
Insured
ver. 1 – w.e.f. Aug. 16 3

Now, it is time to keep that promise - Claim
A claim is a demand for performance of the promise

made by the insurer at the time of making the contract.
These would differ under each policy.
Pay me as
you
promised Insurer
Insured
ver. 1 – w.e.f. Aug. 16
4
Claims could
Types of Claimsbe of different
types
• Maturity Claim
• Survival Benefit
Payments
• Death Claim
• Claim Concession
• Accident and
Disability
Survival claims payable evenbenefits
when the life assured is alive and While a
Death claim arises only upon the death of the life assured,
• Critical illness
claims etc.
ver. 1 – w.e.f. Aug. 16
5
Claims could be of different
Events Triggering Survival Claims
types
• Maturity Claim
• Survival
i.Maturity of the policy Benefit
Payments
ii. An instalment payable upon reaching the milestone under a
money-back• Death
policy Claim
• Claim
iii. Critical Concession
illnesses covered under the policy as a rider benefit
• Accident and
iv. Surrender of the policy either by the policyholder or assignee
Disability benefits
• Critical illness
claims etc.
ver. 1 – w.e.f. Aug. 16
6
Claims could
Ascertaining be aofclaim
whether different
event has
types
occurred
i. For payment of a survival claim, the insurer has to ascertain that the event has occurred
as per the conditions stipulated in the policy.
ii. Maturity claims and money-back instalment claims are easily established as they are
based on dates which are determined at the beginning of the contract itself.
iii. Surrender value payments are different from other claim payments. Unlike other
claims, here the event is triggered by the decision of the policy holder or assignee to
cancel the contract and withdraw what is due to him or her under the contract. Surrender
payments would typically involve a penalty for premature withdrawal and hence would
be less than what would have been due if the full claim were to be paid.
ver. 1 – w.e.f. Aug. 16

7
Claims could be of different
Ascertaining whether a claim event has
types
occurred
iv. Critical illness claims are ascertained based on the medical and other records provided
by the policyholder in support of his claim.
v. A maturity or death claim or a surrender leads to termination of the insurance cover

under the contract and no further insurance cover is available. This is irrespective of
whether the claim is actually paid or not. Non-payment of a claim does not assure the
continuity of insurance cover under the contract.
ver. 1 – w.e.f. Aug. 16

8
Not all claims happen only when there is an unfortunate
event…
Since there is a savings A claim can also made when

element involved in the the policy matures
policies
ver. 1 – w.e.f. Aug. 16
9
What are Maturity Claims?
The date on which the term is complete

is the date of maturity
Settlement of sum assured on that date is
called Maturity Claim
Insurer usually sends advance intimation
regarding the maturity of the policy
ver. 1 – w.e.f. Aug. 16

What is the amount paid under Maturity claim?
Sum Assured
Loans and
Interest of Maturity
Outstanding claims
Premiums
Bonus if any
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Maturity Claims
The insurer has to satisfy that:

• There are no assignments
• The identity of the policyholder is proved
• The age stands admitted
• The premiums are all paid (Not required for paid up policy)
• Check for entitlements if any (like accident benefit)
• The original policy is handed in
• The discharge voucher is duly completed
ver. 1 – w.e.f. Aug. 16

Settling Maturity Claims
• The insurer is expected to make

payments on the maturity date
• So, post dated cheques are sent in

advance after the duly signed
discharge voucher is received
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We have understood Maturity claims
There are also claims that arise during the term
14
ver. 1 – w.e.f. Aug. 16

These are called Survival benefits
Survival Benefits are paid during the currency of the

policy before the date of maturity
Action is initiated by the insurer and the post dated

cheques are sent to the customer
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15
Death Claims
Settling death claim is more complicated than Maturity

claims. This is where the help of the agent is required the
most.
16
ver. 1 – w.e.f. Aug. 16

Documents needed to settle a death claim
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EARLY DEATH CLAIMS
Sometimes, death claims are made very

quickly after the commencement of the
policy.
Naturally, they raise suspicion.
18
ver. 1 – w.e.f. Aug. 16

What is an Early death claim?
If the death claim occurs within 3

years from the Date of
commencement or revival it is called
as Early death claim
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Additional documents for Unnatural death
Police Inquest report

Chemical analyzer report
Postmortem report
Panchnama – Coroner’s report
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What if I don’t know if the
insured is dead. He has been
missing for a long time?
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Presumption of Death
• A person is presumed to be dead if he is

missing and not heard of for 7 years
• In such cases, the insurer asks for a decree
from court for presumption of death
• Date of death is taken as date of court
order
• Premiums have to be paid till court
judgment
ver. 1 – w.e.f. Aug. 16

IRDA regulations related to claims
23
ver. 1 – w.e.f. Aug. 16

Calling for requirements
• The insurer should ask for all

requirements in the case of a
claim at one time and not
piecemeal
• These requirements should be
called within 15 days of the
receipt of the claim
ver. 1 – w.e.f. Aug. 16

Deciding on claims
• The decision to admit or to

repudiate should be made 30 days
of receipt of papers
• If an investigation is necessary, it
should be completed within 6
months
ver. 1 – w.e.f. Aug. 16

Payment of interest for delay
• Interest at 2% over the bank rate will be payable for the delays
in settling the death claims
• Interest at the savings Bank rate will be paid if the insurer is
ready to pay but the claimants are not ready to collect
ver. 1 – w.e.f. Aug. 16

Key Learning's
• Claims are the fulfillment of the obligation entered into by the

insurer when the policy is taken out
• A claim is called a death claim if the life assured dies while the
policy is in force
• Survival benefit claims are partial maturity claims
• Sec.45 (Indisputability Clause)
• Presumption of death
ver. 1 – w.e.f. Aug. 16

Test
Given below is a list of policies. Identify under which type of

policy, the claim payment is made in the form of periodic
payments?
I. Money-back policy
II. Unit linked insurance policy
III. Return of premium policy
IV. Term insurance policy
ver. 1 – w.e.f. Aug. 16

Test
Given below is a list of policies. Identify under which type of

policy, the claim payment is made in the form of periodic
payments?
I. Money-back policy
II. Unit linked insurance policy
III. Return of premium policy
IV. Term insurance policy
ver. 1 – w.e.f. Aug. 16

Test
Mahesh has bought a life insurance policy with a critical illness

rider. He has made absolute assignment of the policy in favour
of Karan. Mahesh suffers a heart attack and there is a claim of
Rs. 50,000 under the critical illness rider. To whom will the
payment be made in this case?
I. Mahesh
II. Karan
III. The payment will be shared equally by Mahesh and Karan
IV. Neither of the two because Mahesh has suffered the heart
attack but the policy is assigned in favour of Karan.
ver. 1 – w.e.f. Aug. 16

Test
Mahesh has bought a life insurance policy with a critical illness

rider. He has made absolute assignment of the policy in favour
of Karan. Mahesh suffers a heart attack and there is a claim of
Rs. 50,000 under the critical illness rider. To whom will the
payment be made in this case?
I. Mahesh
II. Karan
III. The payment will be shared equally by Mahesh and Karan
IV. Neither of the two because Mahesh has suffered the heart
attack but the policy is assigned in favour of Karan.
ver. 1 – w.e.f. Aug. 16

Test
Praveen died in a car accident. The beneficiary submits

documents for death claim. Which of the below document is
an additional document required to be submitted in case of
accidental death as compared to natural death.
I. Certificate of burial or cremation

II. Treating physician’s certificate
III. Employer’s certificate
IV. Inquest Report
ver. 1 – w.e.f. Aug. 16

Test
Praveen died in a car accident. The beneficiary submits

documents for death claim. Which of the below document is
an additional document required to be submitted in case of
accidental death as compared to natural death.
I. Certificate of burial or cremation

II. Treating physician’s certificate
III. Employer’s certificate
IV. Inquest Report
ver. 1 – w.e.f. Aug. 16

Test
Which of the below death claim will be treated as an early

death claim?
I. If the insured dies within three years of policy duration

II. If the insured dies within five years of policy duration
III. If the insured dies within seven years of policy duration
IV. If the insured dies within ten years of policy duration
ver. 1 – w.e.f. Aug. 16

Test
Which of the below death claim will be treated as an early

death claim?
I. If the insured dies within three years of policy duration

II. If the insured dies within five years of policy duration
III. If the insured dies within seven years of policy duration
IV. If the insured dies within ten years of policy duration
ver. 1 – w.e.f. Aug. 16

Test
Given below are some events that will trigger survival claims.
Identify which of the below statement is incorrect?
I. Claim paid on maturity of a term insurance policy

II. An instalment payable upon reaching the milestone under a
money-back policy
III. Claim paid for critical illnesses covered under the policy as
a rider benefit
IV. Surrender value paid on surrender of an endowment policy
by the policyholder
ver. 1 – w.e.f. Aug. 16

Test
Given below are some events that will trigger survival claims.
Identify which of the below statement is incorrect?
I. Claim paid on maturity of a term insurance policy

II. An instalment payable upon reaching the milestone under a
money-back policy
III. Claim paid for critical illnesses covered under the policy as
a rider benefit
IV. Surrender value paid on surrender of an endowment policy
by the policyholder
ver. 1 – w.e.f. Aug. 16

Test
A payment made under a money-back policy upon reaching a

milestone will be classified under which type of claim?
I. Death claim
II. Maturity claim
III. Periodical survival claim
IV. Surrender claim
ver. 1 – w.e.f. Aug. 16

Test
A payment made under a money-back policy upon reaching a

milestone will be classified under which type of claim?
I. Death claim
II. Maturity claim
III. Periodical survival claim
IV. Surrender claim
ver. 1 – w.e.f. Aug. 16

Test
Shankar bought a 10 year Unit Linked Insurance Plan. If he dies

before the maturity of the policy which of the below will be
paid?
I. Lower of sum assured or fund value

II. Higher of sum assured or fund value
III. Premiums paid will be returned with 2% higher interest rate
as compared to a bank’s savings deposit
IV. Surrender value
ver. 1 – w.e.f. Aug. 16

Test
Shankar bought a 10 year Unit Linked Insurance Plan. If he dies

before the maturity of the policy which of the below will be
paid?
I. Lower of sum assured or fund value

II. Higher of sum assured or fund value
III. Premiums paid will be returned with 2% higher interest rate
as compared to a bank’s savings deposit
IV. Surrender value
ver. 1 – w.e.f. Aug. 16

Test
Based on classification of claims (early or non-early), pick the

odd one out?
I. Ramya dies after 6 months of buying a term insurance plan

II. Manoj dies after one and half years of buying a term insurance
plan
III. David dies after two and half years of buying a term insurance
plan
IV. Pravin dies after five and half years of buying a term insurance
plan
ver. 1 – w.e.f. Aug. 16

Test
Based on classification of claims (early or non-early), pick the

odd one out?
I. Ramya dies after 6 months of buying a term insurance plan

II. Manoj dies after one and half years of buying a term insurance
plan
III. David dies after two and half years of buying a term insurance
plan
IV. Pravin dies after five and half years of buying a term insurance
plan
ver. 1 – w.e.f. Aug. 16

Test
Given below is a list of documents to be submitted for a

normal death claim by all beneficiaries in the event of death of
life insured. Pick the odd one out which is additionally
required to be submitted only in case of death by accident.
I. Inquest report
II. Claim form
III. Certificate of burial or cremation
IV. Hospital’s certificate
ver. 1 – w.e.f. Aug. 16

Test
Given below is a list of documents to be submitted for a

normal death claim by all beneficiaries in the event of death of
life insured. Pick the odd one out which is additionally
required to be submitted only in case of death by accident.
I. Inquest report
II. Claim form
III. Certificate of burial or cremation
IV. Hospital’s certificate
ver. 1 – w.e.f. Aug. 16

Test
As per IRDAI (Protection of Policyholders Interests)

Regulations, 2002, a claim under a life policy shall be paid or
be disputed, within 30 days from the date of receipt of all
relevant papers and clarifications required.
I. 7 days
II. 15 days
III. 30 days
IV. 45 days
ver. 1 – w.e.f. Aug. 16

Test
As per IRDAI (Protection of Policyholders Interests)

Regulations, 2002, a claim under a life policy shall be paid or
be disputed, within 30 days from the date of receipt of all
relevant papers and clarifications required.
I. 7 days
II. 15 days
III. 30 days
IV. 45 days
ver. 1 – w.e.f. Aug. 16


Payments Under A Life Insurance Policy

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Chapter 16

Payments Under A Life Insurance Policy

Types of claims Types of Claims

ver. 1 – w.e.f. Aug. 16

ver. 1 – w.e.f. Aug. 16 3

A claim is a demand for performance of the promise

ver. 1 – w.e.f. Aug. 16

v. A maturity or death claim or a surrender leads to termination of the insurance cover

ver. 1 – w.e.f. Aug. 16

Since there is a savings A claim can also made when

The date on which the term is complete

ver. 1 – w.e.f. Aug. 16

ver. 1 – w.e.f. Aug. 16

The insurer has to satisfy that:

ver. 1 – w.e.f. Aug. 16

• The insurer is expected to make

• So, post dated cheques are sent in

ver. 1 – w.e.f. Aug. 16

There are also claims that arise during the term

ver. 1 – w.e.f. Aug. 16

Survival Benefits are paid during the currency of the

Action is initiated by the insurer and the post dated

ver. 1 – w.e.f. Aug. 16

Settling death claim is more complicated than Maturity

ver. 1 – w.e.f. Aug. 16

ver. 1 – w.e.f. Aug. 16

Sometimes, death claims are made very

ver. 1 – w.e.f. Aug. 16

If the death claim occurs within 3

ver. 1 – w.e.f. Aug. 16

Police Inquest report

ver. 1 – w.e.f. Aug. 16

ver. 1 – w.e.f. Aug. 16

• A person is presumed to be dead if he is

ver. 1 – w.e.f. Aug. 16

ver. 1 – w.e.f. Aug. 16

• The insurer should ask for all

ver. 1 – w.e.f. Aug. 16

• The decision to admit or to

ver. 1 – w.e.f. Aug. 16

ver. 1 – w.e.f. Aug. 16

• Claims are the fulfillment of the obligation entered into by the

ver. 1 – w.e.f. Aug. 16

Given below is a list of policies. Identify under which type of

ver. 1 – w.e.f. Aug. 16

Given below is a list of policies. Identify under which type of

ver. 1 – w.e.f. Aug. 16

Mahesh has bought a life insurance policy with a critical illness

ver. 1 – w.e.f. Aug. 16

Mahesh has bought a life insurance policy with a critical illness

ver. 1 – w.e.f. Aug. 16

Praveen died in a car accident. The beneficiary submits

I. Certificate of burial or cremation

ver. 1 – w.e.f. Aug. 16

Praveen died in a car accident. The beneficiary submits

I. Certificate of burial or cremation

ver. 1 – w.e.f. Aug. 16

Which of the below death claim will be treated as an early

I. If the insured dies within three years of policy duration

ver. 1 – w.e.f. Aug. 16

Which of the below death claim will be treated as an early

I. If the insured dies within three years of policy duration