What is TAT in Life Insurance?

You might already know what ‘Turn Around Time’ or ‘TAT’ means. This term is especially common in a professional setting. Generally, TAT is the time it takes to complete a task, fulfil a request, or complete a process. But did you know that even life insurance policies have a ‘Turn Around Time’?

When it comes to life insurance, TAT refers to the time it takes to settle a claim or issue a policy. Turn around time also comes into play for certain policies that offer returns upon maturity. Here’s all you need to know about TAT for life insurance policies.

Why Do Life Insurance Plans Have a Turn Around Time?

It is important to remember that insurers get hundreds of insurance applications per day. Just like you take time to complete your tasks at work, insurance company employees also need to evaluate each application. Similarly, every time an insurance nominee makes a claim, the insurer must also check the validity of the claim to prevent fraudulent applications.

This is why each insurer company has its own turn around time for completing various processes. Knowing the exact TAT for a process helps the customer remain calm and patient. They know that their process will take some time to complete. Not disclosing the TAT for a process will simply cause the customer to feel disgruntled, as they will think that their claim/application is being ignored without any due evaluation. This is why it is essential for an insurer to disclose their TAT to their customers.

What is the Usual TAT for Life Insurance Claims?

An insurance company cannot start a claims process unless you intimate them of your claim. So, the very first step needs to be initiated by you. If you’re the nominee of an insurance policy, please let your insurer know of your outstanding claim as soon as possible.

Once you have made your claim, the insurer will ask you to provide various documents including identity proof, proof of the policyholder’s death, policy documents etc. Generally, most insurance companies will pay out the claim settlement in a matter of 30 days after receiving all relevant documents.

However, if the claim requires further investigation (due to unexpected circumstances of death, fraud concerns etc.), then the insurer may take up to 90 days to conclude their inquiry. Once the investigation is complete, the claim must be paid out within 30 days. So, the insurer may take up to 120 days (90 days for investigation plus 30 days to complete settlement) to pay a claim that merits investigation.

If the insurer fails to pay the claim within the statutory period, they may have to pay additional interest on top of the claim amount. Interest rate will depend on the current rate as stipulated by the Insurance Regulatory and Development Authority of India (IRDAI). If the insurer is delaying your claim payout beyond the stipulated TAT, you can file a complaint at Grievance Redressal Mechanism - IRDAI.

What is the TAT for Life Insurance Policy Approvals?

Generally, the processing of life insurance proposals is concluded within 15-30 days, and you should receive a copy of your proposal form within a month’s time. Of course, the TAT may extend if your policy requires you to undergo a medical test. The waiting period for proposal form approvals may vary from company to company, depending on their own internal risk assessment process.

Additionally, an insurance company may also take 15-30 days to pay any maturity benefits accrued by your savings insurance plan. The time during which you receive your maturity payouts is also known as the ‘payout period’.

Conclusion

Before purchasing an insurance plan, ask the insurer what their TAT is for claim settlement and other processes. This will help you keep track of your applications. Moreover, if the insurer exceeds their TAT, you will have reasonable cause to file a grievance or ask for a speedy conclusion to your request. Note that each insurer has different TATs for different processes, but certain TATs (such as those for claim settlement) are set by the IRDAI itself. So, when it comes to claim settlement, the insurer must pay out the outstanding amount with the time limit and may not reject your claim without reasonable cause.

 

Aastha Mestry - Portfolio Manager 

An Author and a Full-Time Portfolio Manager, Aastha has 6 years of experience working in the Insurance Industry with businesses globally. With a profound interest in traveling, Aastha also loves to blog in her free time.