Claims

.
Aviva Life Insurance Company India Pvt. Ltd
 OBJECTIVES

By the end of the session we will be able to understand

 The procedures followed for settlement of claims under life

insurance policies

 The rationale behind such procedures

 The risks and necessary safeguards to be applied while

settling claims
 CLAIMS

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. The insurer should find out:

 Whether policy holder has performed his part.

 Whether insured event has taken place.

 Who are the persons entitled to demand performance.

 Nomination/ assignment/income tax notice/ prohibitory

orders /official assignees notice
 TYPES OF CLAIMS

DEATH
SURVIVAL

MATURITY

*Surrender value is also treated as claim

 MATURITY CLAIMS

LOAN PLUS
SUM
ASSURED +
BONUSES
IF ANY - INTEREST IF
ANY WITH THE
DUE PREMIUMS

=
MATURITY CLAIM

The date on which the Policy term is completed is called

date of Maturity. The settlement of Sum Assured on that
Date is Called as Maturity Claim.
Insurer usually sends advance intimation regarding the
maturity of the policy.
 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 a paid up policy)

The original policy is handed in

The discharge voucher is duly signed

 MATURITY CLAIMS

 The insurer is expected to make payments on the maturity date

 Post dated cheques are sent in advance after the duly signed
discharge voucher is received

 If the insured dies before date of maturity, the maturity cheque is

cancelled and death claim will be processed
Difficulties encountered in settling the
claim

The original policy The policy is The policy is under

covered under
is reported lost Absolute
MWP Act
assignment

The claim can be The policy proceeds The payment will

settled by taking an will be paid to the be made to the
“Indemnity Bond” trustee or to the Assignee.
and a copy of beneficiaries if they
Advertisement in the (Under Conditional
newspaper are competent to Assignment if the
contract
title has reverted to
the life assured,
he/she can also
receive the
payment directly)
 SURVIVAL BENEFIT PAYMENTS

Survival benefits are paid during the currency(period) of

the policy, before the date of maturity

POLICY
START MATURITY
DATE
DATE
SURVIVAL BENEFITS ARE PERIODICAL PAYMENTS

SURVIVAL SURVIVAL SURVIVAL

BENEFIT DATE BENEFIT DATE BENEFIT DATE
SURVIVAL BENEFIT PAYMENTS

Action is initiated by the insurer and the post dated cheques are
sent to the customer

If the policy is lost, an indemnity bond will not suffice as the

policy still exists. Instead a duly endorsed duplicate policy is
issued

If the life assured dies after the survival benefit due date but
before it is settled instead of the survival benefit the death
benefit will be paid to the nominee

Survival benefit is basically paid in money back (anticipated

endowment)policies.
 DEATH CLAIM

 Settling death claim is more complicated than maturity

claims

 The death claim action begins with the intimation being

received in the insurer’s office

 The intimation may be sent by nominee, assignee, a relative

of life assured, the employer, agent or development officer
 DEATH CLAIM

 The office need not wait for

the intimation of the claim.

 In case of air-crashes, rail OBITUARY

accidents, leading newspaper
will cover all details.

 Also obituary columns are

sources of intimation of
Death.
DOCUMENTS REQUIRED TO SETTLE A DEATH
CLAIM

ASSIGNMENT OR PROOF OF AGE,

POLICY REASSIGNMENT IF ALREADY
DOCUMENT DEED NOT ADMITTED

LEGAL EVIDENCE FORM OF

CERTIFICATE OF TITLE, IF NO DISCHARGE
OF DEATH ASSIGNMENT OR EXECUTED AND
NOMINATION WITNESSED
 EARLY DEATH CLAIM

IF THE DEATH OCCURS WITHIN 3 YEARS FROM THE

DATE

OF COMMENCEMENT OF THE POLICY

 DOCUMENTATION FOR EARLY DEATH CLAIM

If the death claim occurs within 3 years from the date of

Commencement or Revival the following additional
documents are required

Statement from the last medical attendant giving details

of last illness and treatment

Statement from the hospital, if the deceased had been

admitted to hospital

Statement from the person who had attended last rites and
had seen the dead body

Statement from the employer, if the deceased was employed

showing details of leave
 UNNATURAL DEATH

In case of accident, suicide, or unknown

causes the following documents would also
be required CHEMICAL ANALYZER’S REPORT

POLICE INQUEST REPORT

PANCHNAMA

POSTMORTEM
CORONER’S REPORT REPORT
 EARLY CLAIMS

 Claims arising within 3 years are looked at with suspicion

because there could be suppression of material facts which if
found true, would result in repudiation of claim

 When the policy is revived on the basis of evidence of good

health during underwriter’s scrutiny, an early claim in this
scenario would raise the same issues as above
 DISPUTES

 In case of repudiation of claim, the claimant may go to the

court

 The court is more sympathetic to the policyholder and the

insurer may be asked to prove the suppression of facts

Insurer may fail to submit enough evidence and may

still end up paying the claim
 DISPUTES

 The insurer despite of these inconveniences still prefers to do

the enquiry because it prevents anybody from taking undue
advantage of the insurer

 Also it helps improve the underwriting standards and also

helps point out agent and regions more prone to claims
 PROOF OF TITLE

 In case of no valid nomination or assignment the claimant

would have to prove his title

 Title is proved through legal procedures like probate of will,

succession certificates

 If the amount of claim is not large, insurers may waive the

proof of title and settle the claims on the basis of declaration,
affidavits and indemnity bonds
 PRESUMPTION OF DEATH
 As per Indian Evidence Act, a presumption of death can be
made if a person is not heard of for a period of seven years

 If the nominee or claimant of such a person claims that he

is missing and must be presumed to be dead,then the
insurer asks for a decree from a competent court for the
presumption of his death
 PRESUMPTION OF DEATH

 Proof of death is an important document

 A death certificate issued by the municipal office or similar

local body is the acceptable proof of death

 A certificate from burial cremation is also acceptable

 Statements from witnesses of the last rites can be used as the

supporting evidence

 In case the body is not found the statement from competent

authorities with relevant information is acceptable

 In case of defense personnel, the statement from the

Commanding Officer may be obtained
 PRECAUTIONS- IF THE PERSON IS A LUNATIC

 As per the Indian Lunacy Act, if the person is mentally

deranged, a guardian has to be appointed by the court of law
to manage the properties of the diseased

 In case the person has recovered from the mental disorder a

medical certificate is required.
 PRECAUTIONS

 Any order from the court or any other judicial authority

has to be respected by the insurer

 The claimant however can contest these orders with the

court
 PRECAUTIONS

 If life assured dies before the maturity date but before the
claim is paid, the claim has to be treated as a death claim

 If the assured has died after the maturity date but before the
receipt is discharged, the claim has to be treated as the
maturity claim and paid to the legal heirs.

 Death certificate and evidence of title would be required

 PRECAUTIONS

 Payment of claim amount to non resident Indians are

governed by the Foreign Exchange Control Regulations

 A policy is financed through funds of Hindu undivided

family, the policy belongs to the HUF and the policy moneys
will be paid to the ‘karta’ of HUF
 TIME BARRED CLAIM

 If the intimation of death is received 3 years after the death

 Investigation would be done like in early claims as the insurer

would have grounds of suspicion and there might be a possibility
of fraud
 ACCIDENT AND DISABILITY BENEFITS

 These benefits are conditional on conclusive evidence

 All the eligibility conditions must be present and the
exclusions must not apply
 CONDITIONS

 The accident must be caused by outward, violent means,

not self inflicted

 The death must be result of injuries caused by that accident

 The death must occur within 120 days or such other period
as may be specified
 EXCLUSIONS

 Intentional self –injury, attempted suicide, insanity,

immorality, intoxication

 Accident while engaged in civil aviation or aeronautics,

other than as a passenger

 Injuries resulting from riots, civil commotion etc

 CLAIM CONCESSION

 It happens sometimes that even though the policy has

lapsed still the claim is paid in full
 CLAIM CONCESSION

After three years ,if the death claim arises within six
months from the date of lapse

WITHIN 6 MONTHS

DATE OF LAPSE
DATE OF DEATH

FULL SUM ASSURED - OUTSTANDING PREMIUMS WITH INTEREST

 CLAIM CONCESSION

After five years ,if the death claim arises within 1 year
from the date of lapse

WITHIN 1 YEAR

DATE OF LAPSE
DATE OF DEATH

FULL SUM ASSURED - OUTSTANDING PREMIUMS WITH INTEREST

 IRDA Regulations
 The insurer should ask for all requirements in the case
of a claim at one time and not piecemeal

 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

 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
 NUMERICAL PROBLEM – 1 & 2

A MONEY BACK POLICY for SA OF Rs.50,000/- matured after

25 years.Survival benefits of 15% each had been paid at

The end of 5th,10th,15th,and 20th years.Bonus had accrued

At Rs.965/-per 1000 sa.INTERIM BONUS @ Rs.25/-per 1000S.A.

(1) what is the maturity claim amount?

(2) what will be the death claim?

If the life assured died in the 25th year of the policy.

 SOLUTION OF 1 & 2

GIVEN, SA = 50,000/-
POLICY TERM = 25 YRS.

SO, SURVIVAL BENEFIT AFTER 5TH YEAR = 15% OF SA

= 15% OF 50,000
= 7,500
SURVIVAL BENEFIT AFTER 10TH YEAR = 15% OF 50,000
= 7,500

SURVIVAL BENEFIT AFTER 15TH YEAR = 15% OF 50,000

= 7,500
SURVIVAL BENEFIT AFTER 20TH YEAR = 15% OF 50,000
= 7,500
----------------------------------------------------
TOTAL SURVIVAL BENEFIT PAID = 30,000

----------------------------- Contd.
 Contd. SOLUTION OF 1 & 2

SO,MATURITY BENEFIT PAYABLE ON 25TH YEAR = (50,000 – 30,000)

= 20,000
ACCRUED BONUS
ON 1000 SA = 965
965 * 50,000
ON 50,000 SA = ---------------
1000
= 48,250
INTERIM BONUS ON 1000 SA = 25
ON 50,000 SA = 1,250

TOTAL MATURITY CLAIM = (20,000 + 48,250+ 1,250) = 69,500

TOTAL DEATH CLAIM = (50,000 + 48,250+ 1,250 ) = 99,500

(IF LIFE ASSURED DIES IN THE 25TH YR.)
 NUMERICAL PROBLEM - 3

The life assured under an endowment without profits

Policy for 20 years for 1,00,000/- SA with dab rider died on

30th June 2007committing suicide. The policy was taken on 21st

March 2007 and was backdated to 1st April 2006.Determine

The amount of claim payable?

 SOLUTION OF PROBLEM - 3

GIVEN,
SA = 1,00,000 WITH DAB
AS PER THE PROBLEM,
DATE OF RISK COMMENCEMENT = 21 03 - 2007

DATE OF DEATH OF THE LIFE ASSURED = 30 –06 - 2007

(COMMITTING SUICIDE)

THAT IS,THE LIFE ASSURED DIED WITHIN THE 1ST YEAR FROM
THE COMMENCEMENT OF THE POLICY.
BECAUSE DEATH CLAIM IS NOT SETTLED IF, LIFE
ASSURED DIES COMMITTING SUICIDE WITHIN THE 1ST
YEAR FROM THE DATE OF COMMENCEMENT,

SO, THE AMOUNT OF DEATH CLAIM PAYABLE = NIL

 NUMERICAL PROBLEM - 4

GIVEN THE FOLLOWING DATA, CALCULATE THE CLAIM

AMOUNT PAYABLE UNDER THE POLICY.

SA Rs.40,000/-,DATE OF COMMENCEMENT , 20 – 07 - 1989

DATE OF DEATH OF THE LIFE ASSURED , 18 – 02 - 2002

QUARTERLY PREMIUM Rs.320 DUE IN JANUARY 2002 NOT PAID.

VESTED BONUS AT THE TIME OF DEATH Rs.750/- per thousand SA.
INTERIM BONUS DECLARED AFTER VALUATION ON 31 – 03 – 2001
IS Rs.70/- PER 1000SA.
 SOLUTION OF PROBLEM - 4

GIVEN,
SA = 40,000/-
DATE OF COMMENCEMENT = 20 - 07 - 1989

DATE OF DEATH = 18 - 02 - 2002

QLY PREMIUM Rs.320/- PAYABLE ON 20 – 01 – 2002 NOT PAID.

AS BECAUSE LIFE ASSURED DIED WITHIN THE GRACE

PERIOD,SO THE CLAIM WILL BE PAYABLE BUT AFTER
DEDUCTION OF TOTAL PREMIUMS DUE IN THAT POLICY YEAR.

SO, CLAIM AMOUNT PAYABLE = 40,000 – (2 * 320)

=39,360
Contd.
 Contd.SOLUTION OF 4

NOW,
ACCRUED BONUS = 30,000

INTERIM BONUS

ON 1000 SA = 70
ON 40,000 SA = 2,800

TOTAL DEATH CLAIM = (39,360 + 30,000+ 2,800) = 72,160

 KEY LEARNINGS

 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

 Death claims get time barred after three years

 In case of death due to unnatural cause and early

claims, the documentation required is more
Thank You