Proposal forms are often filled by the agent. Check the form after it is filled.
M Nagaraju, secretary, department of financial services, ministry of finance, said at a recent event that insurance companies did not ask enough questions while selling policies.
At the time of redemption, however, customers face extensive scrutiny.
His comments underline the need for life insurance buyers to exercise caution while onboarding.
- You can post your health insurance related questions HERE
Key Points
- Insurance buyers must disclose health conditions and lifestyle habits accurately to avoid claim rejection during policy settlement investigations.
- Overstating income for higher insurance cover can result in affordability concerns, claim disputes or partial settlement by insurers.
- Incorrect or outdated nomination details often create legal complications and delays during insurance claim processing for families.
- Customers should personally verify proposal forms and independently answer insurer verification calls without external influence or coaching.
- The free-look period allows policyholders to review terms, request corrections or cancel unsuitable policies with partial premium refund.
Disclose health conditions
Life insurance products are priced on the basis of the probability of death within a pool of customers.
"Accurate information regarding the customer's health allows insurers to price risk correctly," says Nilesh Parmar, chief operating officer, Generali Central Life Insurance.
Insurers may charge a higher premium, known as loading, to cover specific health risks.
"But if an investigation after an early death reveals evidence contrary to the health declarations, the insurer can decline the claim," says Parmar.
Answer health-related questions accurately, including those on conditions such as diabetes or hypertension.
"Disclose lifestyle habits such as tobacco consumption, alcohol use and smoking," says Parmar.
Undergo a health check-up if required.
"Medical examinations help detect pre-existing conditions that a customer may have failed to declare," says Parmar.
Do not misstate income
Some customers overstate their income to qualify for a higher sum assured.
Misstatement of income can prompt the insurer to question the policy's affordability.
Remember that life insurance is meant to make good a loss, not become an instrument of gain.
Misstating your income can result in claim rejection or partial settlement.
Income proof may not be mandatory for lower-ticket insurance policies.
"Insurers typically require documents such as income-tax returns, salary slips, or bank statements for policies with high premiums or high sum assured," says Venkatesh Naidu, director, Insurance Brokers Association of India.
Declare your income accurately and share supporting documents if required.
Avoid nomination-related mistakes
Customers often leave the nomination section blank or fail to clarify their relationship with the nominee.
"Policyholders sometimes nominate minors without appointing a guardian or appointee," says Sonam Chandwani, managing partner, KS Legal & Associates.
Many also fail to update nominations after major life events.
"Invalid or outdated nominations lead to delays because insurers must seek succession certificates or legal heirship documents," says Chandwani.
Fill in nomination details carefully, including the full name, relationship, age and contact details of the nominee.
If the nominee is a minor, provide details of a competent appointee.
"The nomination should not conflict with the will or another instrument of estate planning," says Chandwani.
Periodic reviews of nomination are essential because circumstances change over the duration of an insurance contract.
Reveal existence of other policies
Insurers ask about other policies to ensure a person is not over-insured.
"This allows the insurer to verify the customer's ability to pay and the appropriateness of the total insurance amount," says Kapil Mehta, co-founder, SecureNow Insurance Broker.
It also helps the insurer understand whether the previous cover was issued at standard or higher rates due to health issues.
Check proposal form, take verification call
Proposal forms are often filled by the agent.
Check the form after it is filled.
"It contains critical health disclosures for which the policyholder remains responsible," says Mehta.
The verification call made by the insurer is meant to protect the customer.
"It ensures that the product suits their requirements and they understand its features," says Atri Chakraborty, chief operating officer, IndiaFirst Life Insurance.
Insurers confirm personal details and plan details.
"Customers are also asked to confirm their health status," says Chakraborty.
Don't allow anyone to influence you during the call.
Use free-look period
- Review key policy features after receiving the policy document
- Free-look period is 15 days for offline policies, 30 days for online policies
- If needed, request corrections in details such as sum assured or medical responses through a signed letter
- Surrender policy during free-look period if dissatisfied with its terms
- Most of the first-year premium is refunded after deduction of medical test and few other charges
- You can post your health insurance related questions HERE
Disclaimer: This article is meant for information purposes only. This article and information do not constitute a distribution, an endorsement, an investment advice, an offer to buy or sell or the solicitation of an offer to buy or sell any securities/schemes or any other financial products/investment products mentioned in this article to influence the opinion or behaviour of the investors/recipients.
Any use of the information/any investment and investment related decisions of the investors/recipients are at their sole discretion and risk. Any advice herein is made on a general basis and does not take into account the specific investment objectives of the specific person or group of persons. Opinions expressed herein are subject to change without notice.
Feature Presentation: Ashish Narsale/Rediff
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