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

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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.
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 to6 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 :

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

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 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.
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

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. • 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.
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.

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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
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.

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