How life insurers view mysterious death claims

Just a few days ago, we lost female superstar Sridevi in a rather tragic death. She was found completely immersed and unresponsive in her Dubai hotel-room bathtub, and till today it remains unclear whether Sridevi fell unconscious before or after the drowning. Mysterious deaths can happen to anyone. When the circumstances of one’s death are mysterious or there is some confusion, life insurance claims may be affected and that can throw your entire financial planning off-track at a time when you are no longer there to intervene.

DNA Money spoke to insurance experts to understand how are such claims processed, what documents are required and other nuances of such a probability.

Mystery history

With term life insurance becoming popular, many policyholders these days insure their lives for high sums of Rs 1-2 crore. Insurance serves as a safety net for your family. In case of death during the policy coverage period, the life insurance pays out the claim and transfers the money to your nominee(s). But remember not all insurance claims are settled.

As per latest data, out of total 24 life insurance companies, around eight companies had claim settlement ratio above 95%, 11 companies had claim settlement ratio between 90% to 95% and five companies had claim settlement ratio below 90%.

It is usually seen the claim settlement is delayed when the claim happens rather too quickly after taking the policy, or when the insurer suspects foul-play.

If the circumstances of life assured’s death is puzzling, it is important to know what process life insurance companies follow during claim servicing. Lack of knowledge can be harmful, and can even complicate matters.

Anilkumar Singh, chief actuarial officer, Aditya Birla Sun Life Insurance says that in case the death of a policyholder takes place in mysterious circumstances, the life insurer first needs to rule out that it is not a case of suicide. The insurer waits for the police investigation report.

“According to the report if the nominee is not found involved in the death of the policyholder the claim amount is released to the nominee. However, in case the nominee is found involved, the money is paid to the legal heir of the insured. The process is same whether the death occurs in India or abroad,” says Singh.

Santosh Agarwal, head of Life Insurance, Policybazaar.com agrees that the life insurance company will not pay a claim in case nominee is under investigation as an accused in the mysterious death. Moreover, the insurance company cannot initiate a claim until and unless nominee gets a clean chit in the death case.

“Suicide is not covered in the first year of the policy; however, if it happens after the first year the insurance company will pay the claim. There is no specific difference in the claim process whether the death happens in India or abroad,” notes Agarwal.

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