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Nobody buys term insurance hoping their family will need to use it. But if that day comes, the last thing your loved ones should face is confusion about what to do next. The claim process can feel daunting — especially when it arrives alongside grief — but it is far more structured, transparent, and time-bound than most people realise.
By submitting your details, you agree to PNB MetLife's Privacy Policy and authorize PNB MetLife and/or its authorized service providers to verify the above information and/or contact you to assist you with the policy purchase and/or servicing. You have the option to opt-out of this contact authorization by un-checking the box. The authorization provided by you herein will supersede all earlier authorizations/registrations made by you in this regard.
This guide walks through the entire term insurance claim settlement process, from the first phone call to the final payout. Whether you are a policyholder preparing your nominee in advance, or a nominee currently navigating a claim, you will find a clear roadmap here — step by step, with every timeline and document requirement laid out.
Here is some reassurance before we begin: IRDAI regulations mandate specific timelines and procedures for every claim, and the life insurance industry pays out the vast majority of individual death claims — around 97–98% by count, according to IRDAI’s data. The system works. This guide will help you make it work smoothly for your family.
The claim settlement ratio (CSR) is the percentage of claims settled by an insurer compared to the total claims considered for settlement during a financial year. According to the latest IRDAI data, the Indian life insurance industry settles approximately 98% of individual death claims by count, while most leading private life insurers report individual death claim settlement ratios above 98% and often above 99%.
What this means for you: for every 100 legitimate death claims filed, roughly 97 to 98 are paid. The small percentage of rejections are almost always due to specific, avoidable reasons — non-disclosure of pre-existing health conditions (the single most common cause), misrepresentation of income or other material facts, policy lapse due to non-payment of premiums, and outright fraud.
A word of caution: the claim settlement ratio is one useful indicator, but it is not the only measure of an insurer's reliability. You should also consider the claim settlement amount ratio (the percentage of the total claimed amount actually paid out, which tends to be lower than the number-based ratio), average time taken to settle, and the proportion of claims that remain pending at year-end.
Key takeaway: A ~98% industry claim settlement ratio means the vast majority of claims are paid. Rejections are rarely arbitrary — they are almost always traceable to something preventable at the time of purchase.
Related Articles: Best Claim Settlement Ratio of 99.81% (FY2025-26)
Before diving into the process, it helps to understand the two main types of claims you may encounter.
This is the primary claim type of term insurance. The nominee files a death claim when the policyholder passes away during the policy term. The full sum assured is paid to the nominee as a lump sum, or in instalments if a settlement option was chosen at the time of purchase. Under current income tax provisions, death benefits paid to the nominee under a term insurance policy are generally exempt from income tax under Section 10(10D), subject to prevailing tax laws.
If the policy included riders — critical illness, accidental death benefit, or disability cover — a separate claim may be filed for the rider benefit. Some riders pay out during the policyholder's lifetime (for example, on diagnosis of a listed critical illness), while others enhance the death benefit (accidental death riders typically pay an additional sum assured on top of the base cover). Rider claims may have slightly different documentation requirements, which your insurer will specify.
Here is the complete process, broken into six clear steps. Each step includes what to do, who does it, and what to expect.
The nominee or a family member should inform the insurer as soon as possible — ideally within 24 to 48 hours, though there is no legal deadline that voids a legitimate claim for delayed intimation. Most insurers offer multiple channels for this first notification: a toll-free helpline number (found on the policy document and the insurer's website), email, an online portal or app, or through the insurance agent or advisor who sold the policy.
During this call, provide: the policy number, the policyholder's full name, and the date and cause of death. The insurer will acknowledge the intimation, assign a claims officer, and explain the next steps.
Tip: Keep the policy document accessible and in a known location. It contains the policy number, sum assured, nominee details, and the insurer's contact information. Policyholders should keep a photocopy with the nominee separately from the original.
The insurer will provide a claim form, often downloadable from their website or app. The nominee fills it out with personal details, policy details, cause and circumstances of death, and bank account details for payout. Many insurers now offer fully digital claim submission, though original documents may still need to be submitted physically in some cases.
This is the most critical step. Missing or incorrect documents are the single most common cause of claim delays — not claim rejections, but delays. The complete checklist is provided in the next section. Start gathering documents as early as possible, even while completing the claim form.
Submit the completed claim form along with all supporting documents. You can submit in person at a branch, via courier or registered post (speed post is recommended — keep the receipt), or through the insurer's online portal if available.
Obtain an acknowledgement receipt with the date of submission and a claim reference number. This date is important — it starts the IRDAI-mandated settlement timeline.
The insurer verifies the submitted documents and may conduct an investigation, especially if the claim is filed within the first three years of the policy (the contestability period under Section 45 of the Insurance Act, 1938), the cause of death is accidental or under unusual circumstances, or there are discrepancies in the information provided.
For straightforward claims with complete documentation filed after the contestability period, the review is typically administrative and swift. The insurer may contact the nominee for additional information or documents if needed.
After review, the insurer will take one of three actions: approve the claim and initiate payout via NEFT or RTGS to the nominee's bank account; request additional documents or clarification before making a decision; or reject the claim with a written explanation and information about the nominee's right to appeal.
IRDAI mandate: the insurer must settle the claim within 15 days of receiving all required documents where no investigation is needed. Where an investigation is required, it must be completed and the claim settled within 45 days of receiving the claim, under the IRDAI (Protection of Policyholders’ Interests, Operations and Allied Matters of Insurers) Regulations, 2024.
Walk your nominee through this process while you can. Show them where the policy document is stored, explain the claim steps, and share a copy of the document checklist below. This 30-minute conversation can save your family weeks of confusion during an already difficult time.
Here is a comprehensive checklist. Save or print this section so your nominee has it when needed.
Tip: Create a "claim folder" today. Include photocopies of the policy document, nominee ID proof, and this checklist. Store it with the nominee or in a location they know about. Having everything in one place can reduce settlement time significantly.
The timelines below are regulatory mandates under the IRDAI (Protection of Policyholders' Interests) Regulations, 2024 — not suggestions. Insurers are legally bound to follow them, and IRDAI monitors compliance.
Example: if the penal rate works out to around 7.5% a year, a ₹1 crore claim delayed by 60 days beyond the settlement deadline would earn roughly ₹1,00,00,000 × 7.5% × (60/365) ≈ ₹1.23 lakh in interest — paid automatically along with the claim amount.
Understand the reason: Read the rejection letter carefully. The most common reasons include non-disclosure of pre-existing health conditions at the time of application, policy lapse due to non-payment of premiums, death by suicide within the first 12 months of the policy, and fraudulent or materially misrepresented information.
Appeal internally: Write to the insurer's Grievance Redressal Officer with supporting documents that address the stated reason for rejection. Many claims that are initially queried are eventually paid after the nominee provides additional documentation.
Approach the Insurance Ombudsman: If the internal appeal fails, file a complaint with the Insurance Ombudsman. This is free of charge and the Ombudsman can award compensation up to ₹50 lakh (the limit was increased from ₹30 lakh in November 2023). Complaints can be filed online at IRDAI’s Bima Bharosa grievance portal (which replaced the earlier IGMS) or at the nearest Ombudsman office.
Legal recourse: For claims where the Ombudsman process is insufficient, the nominee can approach the Consumer Disputes Redressal Commission. Under the Consumer Protection Act, 2019 (as per the 2021 Jurisdiction Rules), the District Commission handles complaints up to ₹50 lakh, the State Commission handles ₹50 lakh to ₹2 crore, and the National Commission handles complaints exceeding ₹2 crore.
Most claim rejections stem from issues at the time of application, not at the time of claim. The single most effective way to ensure a smooth settlement is accurate and complete disclosure when buying the policy.
The best time to prepare for a claim is long before one is needed. Here are the most impactful steps you can take today:
If all documents are in order and no investigation is needed, IRDAI mandates that the insurer settle the claim within 15 days. If an investigation is required, it must be completed and the claim settled within 45 days of claim receipt. In practice, straightforward, well-documented claims are often settled well within these limits.
The claim settlement ratio is the percentage of claims paid versus claims received in a financial year. The industry average for individual death claims is approximately 97–98%. While a high ratio is a positive indicator, you should also consider the claim settlement amount ratio (how much of the claimed amount is actually paid) and the insurer's track record for average settlement time. No single metric tells the whole story.
Many insurers now offer online claim intimation and submission through their website or mobile app. However, original documents — especially the death certificate — may still need to be submitted physically. Check with your insurer for their specific digital claim process. Even if online filing is available, keep physical copies of all documents as a backup.
The claim is still valid, but it will likely be investigated more thoroughly. Insurers scrutinise early claims (typically within the first three years, the contestability period under Section 45) to check for non-disclosure or misrepresentation. If the application was honest and complete, the claim will be paid. The only standard first-year exclusion is death by suicide: most term policies exclude suicide within the first 12 months from the date of issuance. If suicide occurs within this period, the nominee receives at least 80% of the premiums paid (excluding taxes and rider charges), not the full sum assured.
After the three-year contestability period under Section 45 of the Insurance Act, 1938, it becomes significantly harder for an insurer to reject a claim on grounds of non-disclosure. A claim can still fail for reasons unrelated to disclosure — for example, if the policy had lapsed due to non-payment of premiums, or if the death falls under an exclusion explicitly written into the policy. But after three years, the insurer cannot repudiate a claim on grounds of misstatement, non-disclosure, or even fraud — Section 45 makes the policy incontestable on those grounds. Maintaining premium payments and having made honest disclosures virtually guarantees claim acceptance after the contestability period ends.
Piyush Kataria, SEO Manager at PNB MetLife, is a seasoned digital marketing strategist with over a decade of experience in optimizing websites for search engines. His expertise extends to keyword research, content strategy, technical SEO, and link building, all of which have been instrumental in driving organic traffic growth at PNB MetLife. With a strong foundation in life insurance, Piyush leverages his industry knowledge to create targeted and effective SEO campaigns.
Sakshi Malhotra is a seasoned marketing professional associated with the Life Insurance industry since 2007. At PNB MetLife, she heads Digital Marketing and Direct to Customer line of business. She is responsible for driving effective customer engagement through the company’s website and social media channels. In addition, she drives customer online buying journeys to help them buy the right product.
Disclaimer:
| Beware of Spurious Phone Calls and Fictitious / Fraudulent Offers! IRDAI or its officials is not involved in activities like selling insurance policies, announcing bonus or investments of premium. Public receiving such phone calls are requested to lodge a police complaint. |
By submitting your details, you agree to PNB MetLife's Privacy Policy and authorize PNB MetLife and/or its authorized service providers to verify the above information and/or contact you to assist you with the policy purchase and/or servicing. You have the option to opt-out of this contact authorization by un-checking the box. The authorization provided by you herein will supersede all earlier authorizations/registrations made by you in this regard.
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