How to File a Claim for a Decreasing Term Life Insurance Policy

Planning for your family’s financial security is essential, especially when it comes with long-term obligations such as a home loan or a child's education. Decreasing term insurance ranks among the more affordable options, as the cover amount decreases over time, in parallel with the gradual repayment of a loan or debt. However, understanding the Decreasing Term Life Insurance Claim Process is just as important as buying the policy itself. Here is an elaborate step-by-step procedure to file a claim for decreasing term life insurance in India. This guide is for the policyholder who wants to put things into place or the beneficiary facing the situation after the insured's demise.

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What is Decreasing Term Life Insurance?

Before diving into the process of an insurance claim, a prospective policyholder must understand what decreasing term insurance is. Decreasing term insurance is a type of life insurance where a certain sum assured reduces over time, typically in line with a concurrent financial liability, such as a home loan or an education loan.
In level term insurance, the sum assured is fixed and remains unchanged. In contrast, with decreasing term life insurance, the benefits associated with it gradually decline, making these insurance policies more affordable than level term plans.

How to File a Claim for Decreasing Term Insurance

Claiming an insurance policy can feel challenging. But when you follow the right procedures and keep the needed documents handy, the entire process could become just a little easier. Here is a step-by-step guide to handling the process of claims for decreasing term life insurance in India.

1. Notify the Insurer Immediately

The first step is to notify the insurer of the policyholder's death as soon as possible. The claim can be lodged through:

Customer care helpline
Email
Online claim submission on the insurer’s website
Visiting the nearest branch office

2. Keep the Policy Documents Ready

Next, you must keep the original policy document ready, which will help in verifying the plan the policyholder chose and the coverage agreed upon. Claims under a decreasing term insurance policy are paid after taking into account the reduction of the sum assured as per the schedule of reduction at the time of death.

3. Submit Required Documents

To process a claim under decreasing term life insurance, you must submit the following documents:
A duly filled-in claim form (available both online and offline)

Original death certificate (issued by a municipal authority)
Original Policy document
Proof of identity and address of the nominee
Age proof of the deceased (in case it has not been submitted earlier)
The nominee's Bank account details
Medical documents, hospital records, and post-mortem report (if applicable)

4. Verification and Claim Assessment

Once all the documents have been submitted, the insurer commences the verification process. This includes checks such as:

Verifying the death certificate
Checking hospital or medical records
Whether the policy was in force at the time of death
Determining the sum assured for payment (since it reduces over time in such policies)

As per the 2024 IRDAI Master Circular:

Death claims settlements (not requiring investigations): 15 days
Early death claims requiring investigations - decision & payment: 45 days

5. Claim Settlement and Disbursement

Upon successful verification, the claim amount gets credited to the nominee's bank account. The amount paid to the nominee for decreasing term life insurance policies will depend on the present cash value of the policy at the time of claim.

Key Tips to Ensure a Smooth Claim Process

The claim process is simple; however, a few proactive steps can make it easier for your family:

Inform your nominee about the policy details

Share the policy number, insurer's name, and coverage type.

Store policy documents safely

Having backup photocopies or digital copies of documents is recommended.

Understand how decreasing cover works

The basic concept is that in decreasing term insurance, the premium remains constant. At the same time, the sum assured goes down, so the nominee needs to be aware of what he/she is supposed to receive.

Keep medical and legal records handy

They are important in case of death by way of illness or accident.

What if the Claim is Rejected?

Claim rejections are rare when all prerequisites are met. Common causes for rejection include:

Non-disclosure of critical health conditions
Non-payment of premiums leads to lapsed policies
Submission of false or incomplete documents
Death within the waiting period (in some policies)

Frequently Asked Questions

1. What is the sum assured in decreasing term insurance?

The sum assured decreases over time, as per the schedule outlined in the policy, often in relation to the balance of a loan.

2. How long does it take to settle a decreasing term life insurance claim?

The processing of claims and turnaround time for settlement is 15-45 days from the date of intimation of the claim, depending on documentation and the need for investigation.

3. In decreasing term insurance, do the premiums paid over time change?

No, generally, the premium remains the same whilst the coverage decreases.

4. Can I reduce my term life insurance policy?

Yes, you can reduce your term life insurance policy in certain cases, but it depends on your insurer’s policy terms and conditions. If you're looking for a policy where the cover amount gradually reduces over time, you can consider a Decreasing Term Insurance plan.

5. What happens if the policyholder dies after the policy has expired?

If death happens after the policy term ends, then there will be no claim.

6. What documents are needed to file a decreasing term insurance claim?

The policy document, death certificate, ID proof, bank particulars, and medical records, if required.

Written by Neviya Laishram

1.7K Linkedin Followers

Reviewed by Vaibhav Kumar Kaushik

A senior editor with years of expertise, she fine-tunes content that connects, converts, and builds trust. She transforms heavy life insurance concepts into clear, aha-moment reads. Writing is her passion, and thinking ahead is second nature. When not wrangling words, she’s crushing game levels because every challenge is a puzzle waiting to be solved.