How much time does an insurer get to pay claims which arise due to critical illness (CI)? In this case, CI was purchased as a rider to a life insurance policy.
In a life insurance policy with CI as a rider, the claim is triggered whenever any one of the CI listed in the coverage terms is diagnosed. Such claims are payable only once during the policy tenure. The time taken to process a CI claim under a rider policy depends on various parameters. If the diagnosis of a CI is after two years of the policy being issued, the claim may be paid within seven to 10 days of receipt of all documents and subject to the insurer's guidelines. If diagnosis of the CI falls within six months of the policy being issued, the claim will not be payable as there is usually a waiting period of six months. If the diagnosis of the CI falls after six months but before two years of the policy being issued, it will be treated as an early claim and decided after conducting an investigation on the basis of the documents provided by the claimant. The time required for a decision may be beyond 10 days. You should also check the policy terms and conditions, as there specific CI which may require medical documents to suggest continuous existence of such illness ranging from 90 days to 180 days to be eligible for a claim. It should also be noted that generally, a survival period of 60 days from the date of diagnosis of certain illnesses is required for the claim to be payable and in some cases, may extend to 60 days of the survival period. However, if the time taken to process your claim exceeds 180 days, the timeline mandated by Irda, you can approach the Ombudsman in your area for a resolution.
I had taken a housing loan of Rs 14 lakh from a corporation bank in May 2006. The bank had advised me to buy a life insurance policy to safeguard the loan payment in the event of my death before completion of 15 loan years. It was a single premium insurance policy (where annual premium is Rs 38,000). I have repaid the loan. Can I continue keeping the insurance policy? Or, since I don't need the insurance, can I ask the insurer to refund the premium?
The objective of a mortgage insurance policy is to provide financial security to a person who has taken a loan in case of his/her untimely death by covering the outstanding loan amount at the time of death. Such plans are usually reducing cover term insurance plans. Yes, the policy can be continued even after foreclosure of the loan, as the policy is not linked to the payouts of the loan but a pre-fixed payment schedule and interest rate agreed at the time of taking the policy. Thus, even if the policyholder has repaid the loan but faces an untimely death, the sum assured payable at that time will be given to the nominee. In case you do not want to continue the cover, you may surrender your policy and receive the surrender value acquired. Such surrender value is available only under single premium pure protection plans.
The views expressed are the expert's own. Send your queries to yourmoney@bsmail.in
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