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Top 5 Reasons for Term Insurance Claim Rejection You Should Know
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5 Common Reasons Why Your Term Insurance Claims Can Be Rejected

A term life insurance policy is bought with the hopes that the benefit amount paid by the insurer will act as a financial backup for your family in case of your untimely demise. In addition, that amount shall help your partner manage the household, pay for the kid’s education, take care of parents, future investments, etc. But, with so many things to accomplish and responsibilities to manage, how would it be when the insurer rejects a life insurance claim?

Praveen Kumar had taken a 1 crore term insurance policy on his 30th birthday for a yearly premium of Rs. 8000 to protect his family from financial uncertainties in his absence. As he was a marketing professional and traveled by road, he also opted for accident benefit rider to secure himself from the accident risks related to frequent road travel, which he considered was the best investment for the future. On account of official work, Praveen left for the USA and his family to handle a few assignments for his company and returned to India after five years. After returning, he took his family for a pilgrimage during which their car met with an accident leaving everyone with severe injuries. 

Still, Praveen was the most affected with multiple fractures. He was confident about handling the hospitalization expenses with the accident benefit rider plan, but he had a rude shock after filing a claim request. The insurance company rejected his claim stating his term insurance policy had lapsed three years before due to non-payment of premium. Since he was not in India during that period, he couldn’t get the updates, and with no auto-debit instruction registered with his bank, the policy had lapsed, leaving him with no coverage. If Praveen had been proactive in checking his insurance policy status once a year, he would have known about the lapse and could have averted this major mishap.

Why do term insurance claims get rejected? 

Just imagine this, the sole earning member of the family passes away, and the insurance claim filed by the nominee gets rejected. All their hopes of leading a decent lifestyle come falling at that moment. To have your term insurance claim denied can be one of the most stressful events for someone who is still grieving the loss of their loved one. For a more precise understanding of the reasons for rejection of term insurance claims, here are some factors:

Top 5 Common Term Insurance Claim Rejection Reasons You should know about

  1. Hiding Information or False Details
  2. Not Disclosing Medical History
  3. Lapsed Policy
  4. No Nominee/Beneficiary
  5. Uncovered Deaths


Hiding Information or False Details

Furnishing incorrect information in the insurance policy is considered a breach of trust and is a valid ground for the insurance company to reject a claim. An insurance policy is a mutual agreement between the policyholder and the insurer, wherein the latter agrees to pay the sum assured at the time of death of the former in return for the premium they pay during the policy term. Unfortunately, some individuals provide wrong information to lower their premium and save a few hundred as premium, and they end up with claim rejection.

Not Disclosing Medical History

If you choose to ignore or provide false information regarding your medical history, age, lifestyle habits, or pre-existing illness or disease while availing of the term insurance policy, which the insurer finds at a later stage, the claim request can be rejected. The best way to avoid this is to undergo the medical test prescribed by the insurer to create transparency. It will also help you understand your body and track down any illness or disease right at the start rather than getting to know about it at the end.

Lapsed Policy

This is one of the top term insurance rejection reasons. Sometimes, a policyholder may not have paid premiums for a few years but wouldn’t know about it. It is only at the time of claim rejection; would they know the policy has lapsed due to non-payment of premium. The term policy should be inactive status for the claim request to be considered. To make sure you don’t miss out on the premiums, it is always best to activate ECS or auto-debit feature with your bank so that premiums get automatically debited from your account on the due date.

No Nominee/Beneficiary

A term insurance policy pays the benefit amount to the nominee or beneficiary assigned by the policyholder when availing the policy. If there is no nominee or beneficiary mentioned in the policy, then the claim would be put on hold. Remember to fill in the required details about the nomination when filling the application form and inform the nominee.

Uncovered Deaths

Apart from the errors made in the claim form, the other term insurance policy rejection reasons are due to a specific type of death that is not covered under a term insurance policy.

  • Death due to self-inflicted injuries: A term insurance plan doesn’t cover the death of a policyholder due to self-inflicted injuries or who is participating in hazardous activities, adventurous. The claim request in such cases will get rejected by the insurer.
  • Death due to Natural calamities: The claim request will get rejected if a policyholder dies in a natural calamity such as earthquakes, floods, cyclones, tsunami, etc. These natural disasters are not covered under a term insurance plan.
  • Death due to STDs: If a policyholder gets infected with any sexually transmitted disease such as HIV/ AIDS, their claim request shall get rejected as these diseases are not covered under the term plan.
  • Death due to addiction: If the death of the insured person is due to alcohol abuse, drug overdose, or consumption of banned substances, then that claim will get rejected by the insurance company since it is not covered under the term policy.
  • Death due to Homicide: If the policyholder is involved in a homicide or any criminal activity involving breach of law which ultimately lead to his or her death, no claim shall be paid by the insurer as such activities are listed under the exclusion list of the term insurance plan.
  • Death during childbirth: Due to complications in pregnancy, if the policyholder happens to die at the time of childbirth, then the insurance claim request will get rejected as such deaths are not covered in a term plan.


Term insurance is an asset that not only guards you during your lifetime but provides a cushion for your family to fall back on when you are not around them. So, pay attention to the details while applying for the policy and save your family members from unnecessary stress while filing claim requests.