Risk Management in Banking and Insurance · Life Insurance

Claims Settlement in Life Insurance: Procedure and Repudiation

Updated 11 October 2026 · Fact-checked

Claims settlement is the insurer's process of verifying a death, maturity or other benefit claim and paying the right person. You check the policy was in force, collect documents, investigate early or doubtful claims, then pay, repudiate with written grounds, or pay into Court if title is disputed.

Understand Claims Settlement in Life Insurance

A life insurance claim is a request to the insurer to pay the policy benefit. It arises on death of the life assured during the term, or on maturity when the life assured survives to the end of the term. Some plans also pay survival benefits or surrender values, but the exam usually focuses on death and maturity.

The insurer's job is to pay the correct person promptly, after confirming that a valid contract existed and the event is covered. For this the insurer keeps records. Under Section 14 of the Insurance Act, 1938, every insurer must maintain a record of policies (policyholder name and address, date the policy was effected, and any transfer, assignment or nomination of which it has notice) and a record of claims (each claim, its date, claimant name and address, and the date it was discharged, or if rejected, the date of rejection and the grounds). These records may be kept in electronic form as the regulations specify.

A death claim needs more checking than a maturity claim. The insurer must see who is entitled (nominee, assignee or legal heir), whether the premiums were paid, and whether the proposal was truthful. A claim that arises soon after the policy starts or is revived is called an early claim. Insurers usually investigate these closely because non-disclosure of health, age or habits is most likely to show up here. The usual test in practice is a short period from the date of risk commencement or revival; the exact period is set by the insurer's claims policy and IRDAI rules, so do not quote a fixed number unless the question gives it.

If the claim is valid, the insurer pays. If it is not, the insurer repudiates it and must state the grounds in writing; the claim record must also carry the date and grounds of rejection. Typical grounds are material non-disclosure or misstatement in the proposal, a lapsed policy, or an event falling under an exclusion. Where claimants conflict or title cannot be proved, the insurer may use Section 47 and pay the amount into Court.

Key rules to remember

Section 14: record of policies: Policyholder name and address + date policy effected + any transfer, assignment or nomination notified; Every insurer must keep this for each policy issued. Electronic form is allowed as the regulations specify.
Section 14: record of claims: Claim + date + claimant name and address + date discharged (or date of rejection and grounds); A rejected claim must show the grounds of rejection.
Section 47: payment into Court (when): Policy maturing for payment + conflicting claims or insufficient proof of title (or other adequate reason) + no satisfactory discharge otherwise → insurer may apply to pay into Court; Applies to a life policy maturing for payment, which covers death claims and maturity claims as the Act uses the word 'maturing'. The Court must be within whose jurisdiction the amount is payable.
Section 47: waiting period: No application before 6 months from maturity by survival or from receipt of notice of death; The Court will not entertain an earlier application.
Section 47: effect: Court receipt = satisfactory discharge to the insurer; The Court invests the amount in Government securities pending disposal and decides all questions on who gets it.

How to solve Claims Settlement in Life Insurance questions

Use this order for any claims question, whether it is a short note or a case with facts.

1Identify the type of claim: death, maturity, survival benefit or other. Note the date of the event and the date of intimation.
2Check the contract was in force: premiums paid, no lapse, or revival done properly. Note how long since commencement or revival to decide if it is an early claim.
3List the documents needed: claim form, policy document, proof of death or survival, age and identity proof, and nominee or legal heir proof.
4Decide whether investigation is needed. For an early or doubtful death claim, verify medical records, cause of death and statements made in the proposal.
5Test the possible repudiation grounds against the facts: material misstatement or suppression, lapse, exclusion. Apply the rule only to what the facts show.
6Check who is entitled: nominee, assignee, legal heir. If claims conflict or title cannot be proved, consider Section 47.
7State the outcome: pay, repudiate with written grounds, or pay into Court. Mention the Section 14 record entry.
8Close with a short conclusion that answers exactly what the question asked.

Quickest way: Four-question claim check

When to use it: Use it for MCQs and for the opening lines of a case answer when time is short.

Was the policy in force on the date of the event?
Is the claim early, so that investigation is likely?
Was there a material misstatement or an exclusion that applies?
Is the claimant clearly entitled, or is there a dispute that points to Section 47?
If all four are clean, pay. If not, name the one that fails and state the consequence.

Common mistakes in Claims Settlement in Life Insurance

Saying every early claim must be repudiated.
Students confuse 'investigate' with 'reject'.
Fix: Investigation is a check. Repudiate only if the investigation shows a valid ground such as material non-disclosure. Otherwise pay.
Forgetting that a rejection needs recorded grounds.
Students focus on the payout and ignore documentation.
Fix: Under Section 14, the claim record must show the date of rejection and the grounds. Mention this in any repudiation answer.
Applying Section 47 as soon as there is a dispute.
The 'conflicting claims' wording is remembered but the six-month rule is not.
Fix: Remember the Court will not entertain an application before six months from maturity by survival or from receipt of notice of death.
Treating Section 47 as limited to maturity claims.
The word 'maturing' suggests only survival.
Fix: The section itself refers to the six-month period running from maturity by survival or from receipt of notice of the insured's death, so it covers death claims too.
Paying the policyholder's family without checking nomination or assignment.
Students assume legal heirs always get paid first.
Fix: Check the record of nomination or assignment first, since Section 14 requires the insurer to record transfers, assignments and nominations it has notice of.
Quoting a fixed number of days or years for early claim or settlement timelines.
Students memorise figures from different sources.
Fix: Use the figure given in the question. If none is given, say the period is as prescribed by IRDAI regulations and the insurer's claims policy.

Worked examples

Example 1

A life policy was issued to Rahul Mehta in Pune. He died some months after the policy commenced. His wife Sunita, the nominee, claims ₹10,00,000. The insurer finds Rahul had a long-standing heart ailment that he did not disclose in the proposal. Advise the insurer on how to deal with the claim.

Show the solution

Type of claim: death claim by a nominee, arising soon after commencement, so it is an early claim and should be investigated.
Contract status: confirm the premiums were paid and the policy was in force on the date of death.
Investigation: collect hospital and treatment records and compare them with the answers in the proposal form.
Test the ground: the heart ailment was known and pre-existing, so non-disclosure exists. Then decide whether it was material, meaning it would have affected the insurer's decision to accept the risk or its terms. A heart ailment ordinarily would.
Outcome: if material non-disclosure is established, the insurer may repudiate. It must communicate the grounds in writing to Sunita.
Records: under Section 14, enter the claim with its date, the claimant's name and address, and the date of rejection and the grounds.

Answer: After investigating, the insurer may repudiate the ₹10,00,000 claim on the ground of material non-disclosure of the heart ailment, if the evidence shows it was material. It must give the grounds in writing and record the date and grounds in its claims record under Section 14.

Example 2

A policy matured by survival on 1 April. The policyholder's two sons both claim the maturity amount, each saying the policy was assigned to him, and the insurer cannot decide who holds good title. On 20 June the insurer wants to apply to the Court. Can it do so? Explain.

Show the solution

Identify the situation: a policy maturing for payment, with conflicting claims and insufficient proof of title. This matches the conditions of Section 47(1).
Check the remedy: the insurer may apply to pay the amount into the Court within whose jurisdiction the amount is payable.
Check the timing: under Section 47(4), the Court will not entertain an application made before six months from the maturing of the policy by survival.
Compute: six months from 1 April ends on 1 October. The date 20 June is earlier than that.
Conclusion: the application would not be entertained on 20 June. The insurer can apply on or after the end of the six-month period.
Explain the effect once permitted: the Court's receipt is a satisfactory discharge to the insurer, the Court invests the amount in Government securities and decides who is entitled.

Answer: No. Section 47 fits the facts because of conflicting claims and doubtful title. But the application cannot be entertained before six months from maturity, and 20 June is within that period. The insurer should apply after the six months have passed.

Exam tips

Section 14 and Section 47 are in the text, so state them precisely: records and their contents for Section 14, conditions, six-month rule and effect of the Court receipt for Section 47.
In a case question, always say whether the claim is early and what investigation follows before you decide to pay or repudiate.
Write the repudiation ground in plain words and link it to a fact in the case. Do not just list grounds.
For MCQs on Section 47, watch the trap options on the waiting period and on who decides entitlement; the Court decides all questions on disposal of the amount.
End each answer with a clear decision: pay, repudiate with grounds, or pay into Court.

Practice questions from Life Insurance

Claims Settlement in Life Insurance in other exams

The same ground in other exams, if you are preparing for more than one or want another angle on it.

Claims Settlement in Life Insurance: frequently asked questions

What documents are usually needed for a life insurance death claim?

Typically the claim form, the original policy document, proof of death such as a death certificate, proof of the claimant's identity and relationship, and medical or hospital records for the cause of death. Early or doubtful claims may need more. The insurer's claims policy sets the exact list.

On what grounds can a life insurance claim be repudiated?

Common grounds are material misstatement or suppression of facts in the proposal, lapse of the policy for unpaid premium, or an event that falls within a policy exclusion. The insurer must give the grounds in writing and record the date and grounds of rejection in its claims record under Section 14.

What is an early death claim and why is it investigated?

It is a death claim that arises soon after the policy starts or is revived. Insurers check these closely because any hidden health or age facts are most likely to surface then. Investigation is not rejection; the claim is paid if it is found valid.

When can an insurer pay a life insurance claim into Court?

Under Section 47, when a policy is maturing for payment and conflicting claims or insufficient proof of title make a satisfactory discharge impossible. The application cannot be entertained before six months from maturity by survival or from receipt of notice of death. The Court's receipt then discharges the insurer.