A

LIVE PROJECT REPORT

ON

“The Study Of Claims Settlement procedure under Life

Insurance Policies in Birla Sunlife “

Live Project of Finance

By

Shailesh Bhavsar

ENROLLMENT NO: 4NB1937

ICFAI NATIONAL COLLEGE, NASHIK.

11 November, 2005

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Contents

I. Introduction------------------------------------------------------------------03

II. Synopsis---------------------------------------------------------------------05

III. Types of Claims------------------------------------------------------------06

IV. Claim Settlement Procedure--------------------------------------------10

V. Conclusion-------------------------------------------------------------------14

VI. Bibliography-----------------------------------------------------------------15

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INTRODUCTION

An insurance claim is the actual application for benefits provided by an

insurance company. Policy holders must first file an insurance claim before

any money can be disbursed to the hospital or repair shop or other

contracted service. The insurance company may or may not approve the

claim, based on their own assessment of the circumstances.

Individuals who take out home, life, health, or automobile insurance policies

must maintain regular payments called premiums to the insurers. Most of the

time these premiums are used to settle another person's insurance claim or

to build up the available assets of the insurance company. But occasionally

an accident will happen which causes real financial damage, such as a

automobile wreck or a tornado or a work-related accident. At this point the

injured policy holder has the right to file an insurance claim in order to

receive money from the insurance company.

In general, the insurance claim is filed with a local representative of the

insurance company. This agent becomes responsible for investigating the

specific details of the insurance claim and negotiating the payment from the

main insurers. Many times a recognized authority (doctor, repair shop,

building contractor) can file the necessary insurance claim forms directly with

the insurance company. However, sometimes the policy holder may not want

to file an actual insurance claim if the damage is minor or another party has

agreed to pay out-of-pocket for their mistake.

After an insurance claim is filed, the insurance company may send out an

investigator called an adjustor or appraiser. The insurance adjustor's job is to

objectively evaluate the insurance claim and determine if the repair

estimates are reasonable. This is to prevent possible fraud by contractors

who may inflate their bills for additional compensation. Insurance companies

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tend to accept the adjustor or appraiser's evaluation as the final word on the

insurance claim.

Some insurance claims may not be recognized by the insurance company

for any number of reasons. If a claimant's premiums have not been paid in

full, the policy itself may not be active. Another insurance company may

have already agreed to pay for the damages listed in the claim. This

happens quite often in automobile accidents where one party is held

responsible. Another reason an insurance claim may be rejected is a failure

to fall under covered conditions. Most insurance policies spell out specific

areas which qualify for benefits. If the accident or damage claim was caused

by carelessness or an unavoidable "Act of God", the insurance company has

the right to withhold payments.

An insurance claim is the only way to officially apply for benefits under an

insurance policy, but until the insurance company has assessed the situation

it will remain only a claim, not a pay-out.

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SYNOPSIS

The claims in life insurance occur only in two cases either at the time of death or

maturity. Therefore there are fewer complications than the General Insurance

Policies. Some companies adopt different strategies to settle the claims. But

some times there is a trade-off between the satisfaction of the insured and

company’s profitability. To prevent the interest of the insured, various options are

available to them to settle the claim as a true compensation. The claims review

committee settles a large number of death claims every year. The Grievance

Redressal Machinery solves the grievances of policyholders that exist in all the

offices of the corporation. There is also an arbitrator, ombudsperson, and above

all Insurance Regulatory Authority of India who address the problems in claim

settlement. The Law Court gives decisions based on the facts & figures provided

by both the parties through their respective lawyers.

The claim settlement should be done in very less time without losing the faith of

the policy holder on the company. At the same time the company authority

should analyze the case to prevent moral hazards, physical hazards etc stick to

the principle of indemnity and utmost good faith and insurable interest of the

policy holder. In life insurance principle of indemnity does not play a vital role

because the exact human life value cannot be determined at any point of time.

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TYPES OF CLAIMS AND SETTLEMENT PROCEDURE

I. Death Claim :

In case of unfortunate event of death of the Life Insured the following standard

requirements need to be submitted:

. *Death certificate issued by Municipal Authority in specified format.

. Original policy document

. Claimant's Statement

. Discharge form

. Legal evidence of title where there is no nomination, assignment or the

policy has not been issued under Married Women's Property Act.

The following additional requirements may be called depending upon the

duration of the Policy and the circumstances of the death:

. Family Physician's Statement.

. Last Attending Physician's Certificate (if applicable)

. Certificate of Treatment from Hospital (if applicable)

. Employer's Certificate (if applicable)

* Note:   Death Certificate to be attested by Branch Head / Relationship Manager

Claim Forms: The different forms are described below.

1) Claimant's Statement: It is required to be completed by the person entitled to

policy moneys. The claimant has to state facts regarding the cause of death,

date of death, terminal illness, the particulars of doctors consulted by the

deceased during the last two years and also all particulars of other life insurance

policies, taken by the Life Assured. 

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2) Family Physician's Statement: It is to be completed by the Life Assured's

family physician.

3) Last Attending Physician's Certificate: It is to be completed by the doctor

who attended on the life assured

during his terminal illness and/or who certified his death.

4) Certificate of treatment from Hospital: This form has to be completed by

the hospital where the deceased life assured was last hospitalized prior to his

death.

5) Employer's Certificate: This has to be completed by the employer of the

deceased.

II. Unnatural Death Claim :

If a death of the LA is for any reason other than natural or due to illness, it

termed as unnatural death claim. In such cases, the following additional

documents need to be submitted.

1. * First Information Report

2. * Police Inquest Report

3. * Panchnama Report

4. * Post - Mortem Report

In case of death due to accident, the above documents would be a necessity.

* Note:   Attestation of all the above documents by Branch Head / Relationship

Manager.

Birla Sun Life Insurance may also have an investigation made into the bonafides

of any claim where it is considered necessary.

III.  Accidental Dismemberment Rider :

 

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This Rider pays part/ full Face Amount to the life assured, if the Life Assured

accidentally looses certain specified body part/s (for more information please

refer the Policy document for Rider Provisions) provided that:

. Dismemberment occurs while the Rider is in force, and

. Due proof is submitted to Birla Sunlife Insurance that dismemberment was

caused solely by external, violent and accidental means.

Claim Requirements

1.  Questionnaire to be completed by the Life Insured claiming

Dismemberment Benefit

2.  Questionnaire to be completed by the doctor/Hospital which treated the life

insured for his injury / dismemberment

3.  Policy Contract

4.  *First Information Report

5.  *Police Inquest Report

The Rider is terminated once the Face Amount is paid partially or in full.

* Note:   Attestation of all the above documents by Branch Head / Relationship

Manager.

Claim Forms :   The different forms are described below.

Questionnaire to be completed by the Life Insured claiming Dismemberment

Benefit

It is required to be completed by the Life Assured. The Life Assured has to state

facts regarding the nature of dismemberment, date of event of dismemberment,

the particulars of doctors consulted by the Life Assured.

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Questionnaire to be completed by the doctor/Hospital which treated the life

insured for his injury / dismemberment

It is to be completed by the doctor who attended the life assured during his

treatment for dismemberment. The medical attendant has to give details about

the nature of dismemberment, his diagnosis, nature of deformity.

Birla Sunlife Insurance may also have an investigation made into the bonafides

of any claim where it is considered necessary.

IV. CI / CI 17 Rider Claim   :  

The Critical Illness Rider pays the Coverage Face Amount if the Life Assured is

diagnosed to be suffering from any one of the four / seventeen illnesses

specified in the Policy conditions (for more information please refer the Policy

document for Rider Provisions). The Claim for Critical Illness Rider benefit has to

be lodged by the Life Insured after 30 days from the date of diagnosis.

Claim Requirements

. Critical Illness Claimant's statement

. Family Physician statement

. Hospital Treatment Certificate

. Policy Contract

. Copies of all medical reports including :

a. Laboratory reports

b. Histopathology reports

c. Specialist reports etc.

The company has a right to require medical examination of the Life Insured and

confirmation of the diagnosis of an Insured Critical Condition by a medical

practitioner appointed by us.

Claim Forms: The different forms are described below.

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1) Critical Illness Claimant form: It is required to be completed by the person

entitled to policy moneys. The claimant has to state facts regarding the cause of

event, date of event, the particulars of doctors consulted by the insured.

2) Family Physician's Statement: It is to be duly completed by the Life

Assured's family physician.

3 Hospital Treatment Form: The form has to be obtained from the hospital

where the life assured was hospitalized for treatment of his Critical Illness. 

Birla Sun Life Insurance may also have an investigation made into the bonafides

of any claim where it is considered necessary.

CLAIM SETTLEMENT PROCEDURE

The settlement of claims is a very important aspect of service to the

policyholders. Hence, the Corporation has laid great emphasis on expeditious

settlement of Maturity as well as Death Claims.

The procedure for settlement of maturity and death claims is detailed below :  

1) Maturity Claims

1) In case of Endowment type of Policies, amount is payable at the end of

the policy period. The Branch Office which services the policy sends out a letter

informing the date on which the policy monies are payable to the policyholder at

least two months before the due date of payment. The policyholder is

requested to return the Discharge Form duly completed along with the Policy

Document. On receipt of these two documents post dated cheque is sent by

post so as to reach the policyholder before the due date.  

2)         Some Plans like Money Back Policies provide for periodical payments to

the policyholders provided premium due under the policies are paid up to the

anniversary due for Survival Benefit. In these cases where amount payable is

less than Rs.20,000/-, cheques are released without calling for the Discharge

Receipt or Policy Document. However, in case of higher amounts these two

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requirements are insisted upon.  

2) Death Claims

The death claim amount is payable in case of policies where premiums

are paid up-to-date or where the death occurs within the days of grace. On

receipt of intimation of death of the Life Assured the Branch Office calls for the

following requirements:

 

a)      Claim form A – Claimant’s Statement giving details of the deceased and

the claimant.  

b)      Certified extract from Death Register  

c)      Documentary proof of age, if age is not admitted  

d)      Evidence of title to the deceased’s estate if the policy is not nominated,

assigned or issued under M.W.P. Act.  

e)      Original Policy Document  

***The following additional forms are called for if death occurs within three years

from the date of risk or from date of revival/reinstatement.  

a)      Claim Form B – Medical Attendant’s Certificate to be completed by the

Medical Attendant of the deceased during his/her last illness

b)      Claim Form B1 – if the life assured received treatment in a hospital  

c)      Claim form B2 – to be completed by the Medical Attendant who treated the

deceased life assured prior to his last illness.  

d)      Claim Form C – Certificate of Identity and burial or cremation to be

completed and signed by a person of known character and responsibility

e)      Claim form E – Certificate by Employer if the assured was employed

person.  

f)        Certified copies of the First Information Report, the Post-mortem report

and Police Investigation Report if death was due to accident or unnatural cause.

These additional forms are required to satisfy ourselves on the genuineness of

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the claim, i.e., no material information that would have affected our acceptance

of proposal has been withheld by the deceased at the time of proposal. Further,

these forms also help us at the time of investigation by the officials of the

Corporation.  

3) Double Accident Benefit Claims

Double Accident Benefit is provided as an inject to the life insurance cover. For

this purpose an extra premium of Rs.1/- per Rs.1000/- S.A is charged. For

claiming the benefits under the Accident Benefit the claimant has to produce the

proof to the satisfaction of the Corporation that the accident is defined as per the

policy conditions. Normally for claiming this benefit documents like FIR, Post-

mortem Report are insisted upon.

4) Disability Benefit Claims

Disability benefit claims consist of waiver of future premiums under the policy

and extended disability benefit consisting in addition of a monthly benefit

payment as per policy conditions. The essential condition for claiming this

benefit is that the disability is total and permanent so as to preclude him from

earning any wage/compensation or profit as a result of the accident

Settle a claim in case the original policy is lost

For settlement of claims, either through maturity or death of the policyholder, this

procedure must be followed. Lost policy questionnaire form duly completed by

the policyholder is called only in case of maturity claims. This can be obtained

from the local Divisional office of LIC. No advertisement is necessary for the loss

of the policy.

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No surety is required either for settlement of claim up to Rs.5000/-. For settling

claims above Rs.5000/- but below Rs.10000/-, a surety is accepted by LIC

without any verification. And in case of claims exceeding Rs.10000/-, the

concerned Branch manager must verify the financial status of the surety.

Procuring this report takes some time so the income tax returns for the last three

years in respect of the person agreeable to stand as surety are called for.

However, where one surety is not available for the requisite amount, two different

sureties of sound financial standing are also acceptable. The surety should be

completely unrelated to the life assured or the claimant. Indemnity bond is

waived in the case of claims up to Rs.1000/-. And for payment of claims

exceeding Rs.1000/-, a stamped Indemnity bond is also required. Discharge form

and form of declaration of no assignment duly completed by the policyholder or

the claimant are also required.

As long as these requirements are fulfilled and submitted promptly, the branch

office can settle the death claim without delays. Early death claims however

involve investigation and careful scrutiny before they are settled.

Arrive at the Claim Amount

Subject to claim concessions, the net amount payable under a policy in

settlement of its claim depends upon its status as on date of death. In case of a

reduced paid-up policy which has not been specifically enclosed for paid-up

conversion, LIC will pay the claim for the full sum assured instead of the paid up

value provided certain conditions are satisfied:

The life assured died within 6 months from the due date of the first unpaid

premium. Premiums under the policy have been paid for a minimum period of 3

full years. Claims concession is not available on certain policies during the

deferment period in case of Children's Deferred Endowment Assurance,

Temporary Assurance and Convertible Term Assurance. Extended claims

concession is an extension of the regular claims concession. Here, the claim for

the full sum assured is payable under a reduced paid-up policy provided two

conditions that : The life assured died within one year from the due date of the

first unpaid premium five years after the deferred date in case of CDA policies. 

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Premiums under the policy have been paid for a minimum of 5 years.

However the claims concession is subject to the deduction of the premium or

premiums unpaid with interest thereon up to the date of death. Unpaid premiums

falling due before the next anniversary of the policy (except in Fixed-Term

(Marriage) Endowment and Educational Annuity plans).

CONCLUSION

Gone are the days when you had to spend months together getting your claim

amount from your insurance company for the death or maturity of the policy

occurs. Endless paper work add to it the running around you have had to do

coupled with the mental exhaustion you went through. And at the end of it all you

receive a compensation that was far lesser than the gaping hole it has made in

your pocket already.

Well, things have changed now. Global insurers have come in and among others,

claim settlement methods will go through a sea change. Thanks to private

insurers the state owned insurers too have now, considering the increased

competition, decided to clean up their act and speed up the claim settlement

procedure.

Insurance products from Tata AIG, Royal Sundaram, and Reliance are expected

to hit the market soon all set to give a tough fight to the existing state owned

insurers

Claim settlements can be made as early as possible if both the parties co-

operate with eachother.The parties should follow the principle of utmost good

faith and remember that the insurance company is not to do business but to

prevent the insured from the financial loss due to the untimely event.

The private insurers after conducting a study on the existing drawbacks of the

industry plan to churn out user-friendly products. Claim settlements have so far

been taking an unusually long time and now hopefully will be done within a

fortnight. Contrary to the earlier practice, henceforth the complete claim amount

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should be paid to the policyholder leaving little chance of manipulation by

surveyors.

BIBLIOGRAPHY

I. www.info-pedia.com

II. www.birlasunlife.com

III. www.licindia.com

IV. Life and health insurance /thirteenth edition/pearson publication.

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