What Is Policy Rejection? – Complete Guide
Policy rejection occurs when an insurance company refuses to issue an insurance policy after reviewing the proposal form, medical reports, or underwriting details submitted by the applicant. In such cases, the insurance coverage never comes into force.
Policy rejection is different from claim rejection or policy lapse, as it happens before the policy is issued.
When Does Insurance Policy Rejection Happen?
A policy may be rejected:
- After proposal form submission
- During medical or financial underwriting
- Before policy issuance
- Before first premium acceptance (in some cases)
Once rejected, the insurer communicates the reason to the applicant.
Common Reasons for Insurance Policy Rejection
Insurance policies may be rejected due to:
- Non-disclosure or misrepresentation of facts
- Adverse medical reports
- High-risk occupation or lifestyle
- Incorrect or incomplete proposal details
- Age or income eligibility issues
- Poor past policy or claim history
Types of Insurance Where Policy Rejection Occurs
- Life Insurance
- Health Insurance
- Term Insurance
- Investment & Retirement Plans
Policy rejection is rare in motor insurance but common in health and life policies.
What Happens After Policy Rejection?
- Insurance coverage is not activated
- Premium paid (if any) is usually refunded
- Applicant receives written communication
- No policy number is generated
Refund timelines vary by insurer.
What to Do If Your Insurance Policy Is Rejected
1. Understand the Reason
Carefully read the rejection letter or email.
2. Request Clarification
Ask the insurer for detailed underwriting reasons.
3. Apply With Another Insurer
Different insurers have different underwriting rules.
4. Correct Errors or Disclosures
Update medical, income, or lifestyle details if required.
5. Seek Professional Guidance
Insurance experts can help choose the right product.
Can You Challenge Policy Rejection?
- Policy rejection is not a legal dispute in most cases
- Insurers have underwriting rights
- However, rejection due to incorrect process or error can be escalated to IRDAI
How to Avoid Policy Rejection
- Disclose all medical and lifestyle details honestly
- Fill proposal forms carefully
- Choose policies suitable to your profile
- Undergo medical tests honestly
- Take expert advice before applying
Conclusion
Policy rejection can be disappointing, but it is not the end of your insurance journey. Understanding the reasons, correcting mistakes, and choosing the right insurer can help you secure insurance coverage successfully.
At Saving Mantra, we guide applicants through policy selection, documentation, and underwriting support to reduce the risk of insurance policy rejection.
Disclaimer
This blog is for informational purposes only and does not constitute legal, financial, or insurance advice. Policy acceptance and rejection depend on insurer underwriting policies and IRDAI regulations. Readers are advised to consult qualified insurance professionals before applying for insurance.