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POSTED BY ON August 25, 2010 COMMENTS (113)
An Agent comes to your home or office and tells you about an Insurance plan. It can be a traditional insurance plan or term insurance. Being an agent, he wants to make sure, you do less work. Anyway most people feel bored or find it tedious to fill out a long form by themselves. After all, the agent is there to do it. It’s an amusing situation, that in today’s generation, we run around all day to different places to buy our TV, Fridge, Washing Machines. We inquire from a million places, read the reviews etc., and make sure you we find out each and every little detail when we buy such products for our home or our convenience, but sadly we don’t care enough to read financial documents or fill them ourselves; documents which will help take care of our little children or family when we are not around; documents that don’t even take few minutes or an hour to look at.
Coming back to the story, this Insurance agent treats the customer as King and customer also feels great about it. The maximum he will do is sign the document (after having a super quick look at the pages, making agent feel that he actually cares about it !) The customer is a smoker, but agent doesn’t even bother to ask. Even if customer tells him about it, the agent does not put “Smoker” in the form as it might reduce the chances of getting the policy and hence no commission 🙂
Now tax saving is coming for the year (not the protection of family, mind you !), and the customer is ready to raise his hands for questions like “Who all have Insurance?” or “Who is adequately covered through life insurance” ? The agent get his commission and mostly disappears, and customer is happily living his life under a happy impression that he has life insurance; until one day, he dies…
The family is devastated, but time goes on and once things settle down, they go to the insurance company and ask them for the Insurance Money… and Pow! The family gets sucker-punched! . The insurance company happily tells them that the customer was a smoker, but has given false information in the documents at the time of taking the policy hence by law, they are will not honour the claim! They are correct . Read a case between LIC and one customer on claim rejection.
This happens with a lot of insurance customers. They tend to give wrong information in the documents; as giving correct information increases the premium. (This happens a lot with smokers.) What’s so wrong if company asks for a higher premium for smokers? If you are a smoker, definitely from a business standpoint (and even logically) you have higher chances of dying than a non smoker. So, it’s natural to charge you a higher premium. But, if you give wrong information in the documents or try to misrepresent anything, it means company is covering a higher risk person for a a normal premium and they are very correct to reject the claim. Read this article to understand more on giving wrong or incomplete information in insurance documents.
Sourav Shah, a senior Manager at Aegon Religare, shares some of his thoughts for claim rejection in comments section.
Hi Manish, To give you a detailed explanation of why the plan ‘iTerm’ is cheap.
The simple reason is ‘There are no middlemen – Agent – involved in selling this product.’ Since this product is sold online there are no agents commission involved and hence the company is not paying anything to the Insurance agent and thus passing on the benefit of the low cost to the consumer. We all know that most insurance products have a commission of 30-40% in the first year premium that is paid to the agent. The reason this product is cheaper because there are no agents commission involved. Secondly, Aegon Religare is the only company that has sought IRDA approvals to sell the product online since we are very keen on providing the customers what a product that they need – a simple term plan – at a price that is affordable.
Regarding the claims ratio, Manish, the 3 customers whose claims were rejected were due to wrong declaration at the time of taking the policy. They had declared themselves as non smokers. I would request all customers who are buying a term plan or any insurance product from any Life insurer, to not hide any facts while taking a policy. The insurers build up the cost based on your declaration, so its always advisable to declare truely in order to ensure that all claims are met. And if any customer faces any issue with any isurer he can contact the insurance ombudsman and he will immediatley look into their issues. Happy buying. Manish this is a beautiful and unbiased platform that you have provided for customers to clarify their doubts. Please keep up the gr8 work.
Regards,
Sourav Shah
(shahsourav@rediffmail.com)(Link)
In case, you have provided any wrong information in your policy document, it’s almost certain that your claim will be rejected. Don’t try to fool insurance companies. They are smarter than you at figuring it out. So contact your Insurance company and give them factual information . This may lead to increase in premium or rejection of policy, but it’s a better situation than getting rejected at the time when you are in the sky.
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The online policy asks you to mention on the consumption detail on a daily basis. if a person drinks 3 to 4 times in a year (limited qty. say 1 or 2 pegs) on special occasion and does not mention about this, is the policy liable for rejection.
I think only customer care will be able to tell you what should be filled in this case
Hi Manish,
My insurer has given me all wrong information before opening the policy. He said that you will get everything in written when you pay the premium and you will receive the bonds.
But when i received the bonds i realised that i got cheated and the policy is completely different. Now what should i do please advice. How can i stop the policy and get my first premium refunded.
Anuj
Hi Anuj
Reach out to Insurance Ombudsman on this. What all proof you have against what you are saying ? Because you will have to proof all this.
Thanks Manish.
I have two more questions here:
1. How to reach out to insurance ombudsman and can i share everything over email or do i need face to face interaction?
2. Is ombudsman only option or can i reach out to IRDA or to court as well,if this doesn’t resolve my problem?
Many thanks,
Anuj Tyagi
1. Yes you can do that
2. Ombudsman is COURT 🙂 .
Very good information.
I am an NRI. During my last trip to India , I was approached by an Agent of a popular Insurance Company . After much cajoling , I gave up and agreed to buy a policy.
Like many others, I trusted him and allowed to complete my details.
Now, after I got my policy , I noticed that he made many errors regarding my Medical and Family history (one of my parent died of Cancer at early age) .
I have immediately informed the insurance company (within Free Look period) through email asking them either to correct records at no additional cost OR cancel the policy . They never responded .
Planning to go to IRDA now. Is it the right approach ?
Thanks
Yes, I suggest complain to IRDA On this
no.
Hi Manish,
What if I don’t smoke but friends I live with smoke. It is kind of passive smoking. Does it affect policy premium ?
If the tests results come positive, then it means you are a smoker 🙂
There are no tests in my knowledge to prove whether you did active or passive smoking 🙂
Its a great question ! .. I am sure no company has thought on this .. So when you fill up your form, mention that you dont smoke, because you really dont .
Hi Manish, I am having high Cholestrol in my previous report but after taking medicines it shows normal.Can i mention this in my health insurance proposal from.same is the case with my wife which is having thyroid but shown normal in report after taking medicine.I am going for family floater policy..Please Guide..
Kiran
Hi Manish
I am planning to take LIC Term Plan, I went through small Ear Surgery some 4 years back. It was a small operation and I was discharged in 2 days and started my work immediately
Do I need to disclose this ? If not my Policy can become Invalid ?
(a) During the last five years did you consult a Medical Practitioner for any ailment requiring treatment for more than a week?
YES
(b) Have you ever been admitted to any hospital or nursing home for general check-up, observation, treatment or operation?
YES
(c) Have you remained absent from place of work on grounds of health during the last 5 years?
YES
Do you think it’s worth mentioning ? As Policy is more to deal with death due to critical illness , Accident or Natural death.
Yes.. better mention it . If its not a related thing, then anyways it not going to impact increase of your premium, but you should disclose it
i m 32 years old.
i have taken a term plan from a private company, company did medical test at the time of taking this policy. but due to a mistake, i forgot to mention my status as a drinker. while i do drink once a month only, but i have mention at no drink in the option of drink question field. can u help me may effect on claim?
and what if claim come after 5 10 year please help…
Your claim will be rejected .. SIMPLE
Just inform the company about it now , It might happen that they charge extra premium for it .. go for it !
Inspired by this article, I carefully filled all details about my health history in HDFC SL Ckick2protect application. Soon a pdf print of proposal form was provided to me.
To my surprise, 98% of the information I wrote does not appear in the PDF print of proposal form. For example, under ‘ have you ever suffered from disporders of digestive system. Give description of incident? ‘ I wrote-
‘Gastritis, ……Oeso………, hiatus hernia, …………., gall-stones…….etc in the year …….. Fully recovered now…..’
However what got printed in proposal form is just first 3 letters
‘Gas’
I am yet to receive the policy-document but my concern is- what if my policy document also shows this type of truncated information? Then how will my family prove in future that I had honestly declared everything in my proposal form?
I believe that the policy document represents the contract between me and insurance Co. and hence must contain each and every word I have written in my proposal form.
I have written to HDFC SL on my concern and waiting from their reply.
Meanwhile, any opinion or suggestions on this?
I am not sure on this, what you declare should be part of the agreement I guess ! , wait for their reply , see what they have to say !
I have recently taken “ICICI Pru iCare RP Option 1” Term insurance policy on 28th March 2012 and I receive policy on 2nd April 2012.
I have given NO answer to High Cholesterol. But, when I just checked my reports of the health check-up done 6 months before, I found that I have borderline high cholesterol (Total: 231.4 and LDL: 138.4).
I am planning to go through the LIPID profile test again and report ICICI if I still have (borderline) high cholesterol. Will I get my premium amount back if my policy is rejected after reporting?
IMPORTANT: I STILL HAVE MORE THAN 10 DAYS OF FREELOOK PERIOD.
Sanjay
they issued you the policy after the medicals , correct ? In which case you dont need to report anything to them
No. There was no medical test.
Hi….
While searching for a specific query about declarations in life insurance, I jumped into your blog and found it really interesting.
Would request your help in resolving a query.
While taking a policy, if a insured has not declared his other policies with that co. or other co, will it amount to suppression of facts at the time of claim and can a claim be rejected basis this issue?
Also can the insured update these details later?
Will it have any impact on the insured post the declaration??
regards
Debajyoti
Debajyoti
Yes .. Not declaring your old insurance policies a material fact and can lead to rejection of claims .. better declare it now and see what the insurance company says .. contact your insurance company
Manish
Thanks Manish….
Dear Manish,
I took Aviva I -life term plan for 35 years.but they not asked me for medical and other test.my age is 31 years and i am non smoker.
also its not cover any others riders.
Regards
Prashant
Hi Manish,
I am regular reader of your blog and a lot of eyeopener topics on finance.
I have recently enrolled for Birla Term insurance. Eventhough, i have not declared some info on the application, I have declared it in teh medical checkup.
Please advise if there is any problem foreseen in future.
Regds
uday
Hi Manish,
What if someone had undergone cosmetic surgery one year back and forgot to mention that in the proposal form. Can that person notify later?
In case of Term plan with only one premium paid, can that person lapse the next premium and get another plan with informing regarding surgery.(Like from Aegon to IPru plan)
Sanghmitra
To me “cosmetic surgery’ does not look like an important fact to declare for taking life insurance ,however why to take any chance , declare this to your company now , I hope there should not be any issue .
If there is , then stop this policy and take a new term plan anyways .. choose kotak or ICICI instead of AR . Just a thought , nothing compulsion
Manish
dear all
wellcome, kindly think once again before taking a pure term plan from net, i.e online.A few charges u may save in the premium but i suggest to take from a family friend life insurance agent, hi ! wait donot shout on me.
because you are taking it for risk cover only yes, then a person know your family will ba a timely help.
donot think in a negetive way.
In my experience, you/we have to visit nearest branch for sigatures physically on proposal forms.
people working in these life insurance companies are basically very slow learners.
i also work in one of these co. for a living !
Dear Manish,
I want 50 lac term insurance, pls guide me which is best now in market with minimum Premium
iTerm and iProtect seem to be cheapest , but in offline Kotak might be cheapest
I want to go for Term Insurance. Is there any platform where I can check the Claim Settlement ratio of different Term Insurance providers?
Kamlesh
You can download the laterst yearly report from IRDA :
Manish
Typically, there is also this question of ‘Do you take alcohol or have you taken in the past,etc.’. So, if a person is not a regular drinker but takes occasionally, say 2 to 3 times a month, would that person be considered a drinker?
Alcohal
I guess so , taking alcohal regularly should come under “drinker” , even though the frequency is lesser
Manish
to an insurance company, a person who consumes alcohol, has to be mentioned in the PROPOSAL FORM..It does not matter whether he is an occasional drinker, social drinker, or habitual drinker..Even if the proposer use to drink alcohol in the past, that too has to be mentioned in the proposal form..
dear all !
hi, wellcome
ulip policies have come to markets with a new face.
front loaded charges came down including surrender charges in the first 3 policy years.
but the funny part is all comapnies came out with only two ulips each.
very boaring, un proffessional sales and so called trainers.
Good
atleast they came with two and honoured the rules
Manish
Clients who encourage agents signing on their behalf cant complain about mis-selling since they indulge in mis-buying. Yes the world is not perfect. I can only hope there are few people who still believe in following rules.
Perfect comment 🙂 . Very true
1. Countersigning is not the same as forgery. So what you have done is different from that stated above. If you didnt forge you have informed the client so its legally valid.
If someone forges with consent of an individual its still legally morally wrong and both are at fault.
2. Morality doesnt look at distances, premium amout or if there will be any harm done. Salesman or not a human being is expected to know this.
“PROFIT THROUGH COMMISSION but RELATIONSHIP BUILDING THROUGH TRUST & SHARING…”
3 I dont see how anyone can trust an agent who forges a signature!
Ps. you didnt say anything about forging your clients signature so pt 3 is directed to that rogue agent.
If you mean somebody countersigns WITHOUT BRINGING IT TO THE KNOWLEDGE OF THE CLIENT, then it is ABSOLUTELY WRONG by whichever way you look at it..I was just referring to the case above where Mr Dominic’s agent put his sign and informed him..Accordingly, i said if the information put in after cutting and countersigning is correct, then it does not matter..
And i mean Relationship building through trust and sharing, is i want that client to be with me knowing fully well that whatever information i am sharing with him is correct and i can nurture his trust for the long term by providing him services [including correct documents, even if i have signed on his behalf by letting him know that i have put in the corrected information ;-)]
Point well taken but please accept that there are sometimes certain structural bottlenecks or hinderances which force an agent, including me, to sign on behalf of agent..For eg, in certain cases, i take information of the client on a different piece of paper and fill the form at my office and sometimes while taking this information from paper to form, i put them wrongly like 4th Feb 1981 as 02/04/81..So i myself correct that and counter sign..
Ps. Please understand, world is not perfect 🙂
“if the agent has forged your sign for cutting in form, and after cutting information filled is correct then i dont see any problem whatsoever”
I find this hilariously annoying. This is a crime by any definition. Well then again agents have different definitions! The other issue is, well for those agents who have never heard about it, let me spell it: M-O-R-A-L: Moral. There is a moral issue involved. Can’t expect agents to know it, they have different vocabulary.
I’ll give you an example how i have counter signed..I was sitting with one of my client and he told me that i am not sure about my height as well as date of birth of my wife..But he insisted to get the form filled in front of him..And so i put his height as 5’6 and his wife’s date of birth as 05/05/1970 (as he told me at that time)..Later on that evening, he called me up and told me that his height is actually 5’8 and his wife’s date of birth is 14/05/1972..Just to correct these two things and to go all the way to him in sector 94, Greater Noida from my home at Punjabi Bagh means travelling 55 km again..Instead, i informed him that i am correcting the information and countersigning in the form..After doing so, i mailed him the scanned copy of the aforesaid proposal form to him..He looked at them and gave me a go ahead..Only then i logged in the case..
Again, i was just sharing my observation..My M-O-R-A-L-I-T-Y says that if you are not duping your client and sharing with him all these things in a systematic way..It is correct..Might be my meaning of MORALITY is different from someother people’s dictionary…(Mind you, the premium amount was only 6,700 and the petrol, telephonic, scanning etc expenses are incurred by me and the commission would actually be peanuts)..So for those who have never ventured out into sales and marketing, i’ll phrase this as not always PROFIT THROUGH COMMISSION but RELATIONSHIP BUILDING THROUGH TRUST & SHARING…
I took a policy sometime in January this year and the the BSL agent put my signature in three places (in a correction counter sign and the 6% and 10% declaration form).
The agent coolly says this is usual and and they do it all the time and needless to worry about it.
After seeing/hearing this I did not pay even a single premium after my first checque. I lost about 25K but the the thing iss with the complaint department. Next I am going to the IRDA.
Regards
Dominic
Good to hear that , but what are those places where he took your signature , how is it a problem
Only the main signature was mine. Dont you think faking a client signature in the application (where ever it is) is a problem during a claim time?
No, if the agent has forged your sign for cutting in form, and after cutting information filled is correct then i dont see any problem whatsoever..Moreoever, what is it to do with CLAIMS??? If maturity claim is to be made, company will match your signature at that time and everything will be smooth and if, GOD forbids, Death claim is there, your nominee is to produce the documents required, nothing else..So no problem..But just check if he has made countersign of yours at same place in the form where INCORRECT information is filled on your part..If that is the case, then you can take all the neccesary action..Otherwise, i dont think there is any need..
@Dhawal: Thank your for your response and I understand your point.
But my point is I dont want to see someone putting my signature in an insurance application document where ever it may be and how ever important it is.
The company might reject a claim (maturity or Death) by saying a crap reason.
I can understand the importance of medical records for life insurance policy.
But I fail to understand: what does my net worth has to do with the sum assured I am planning to propose for.
LIC asked me for last three year IT returns for my term insurance policy proposal.
I see life insurance as a financial product which anyone should be able to buy; irrespective of your current networth.
Puneet
No , Its important .
as per the rules of Life Insurance , Life insurance is not something which you can use for making profits , so if you are earning 5 lacs a year , you cannot take insurance for 20 crores , so that if you die your family makes much more than they require. So your current networth ,gives a good idea of max limit you are eligible for .
Manish
They asked me the same documents too. The way I see it, This is ensure you can afford the premium and you are genuinely employed. The insurance company is entering into an agreement to provide your nominee a large amt of money by taking a small fraction of yearly premium. They do what they can to avoid fraudulent policies and also decrease the likelihood of people stop paying premium.
Yours is a better explaination 🙂
Manish
The complete answer would come after combining both of yours explanation. This is a wonderful post…and the interaction on comments takes its usefulness to a high level.
I think I may provide answers to some of the queries here…will take some time to be sure that my answers are perfect..
Pankaj
Great to hear that , waiting for your participation 🙂
Manish
Last year I wanted to buy a term Insurance from SBI Life Ins. (SBI Life Shield for a sum insurance of 35lacs. However they rejected my policy on medical grounds. I tried to know what is the reason for their rejection but I never got a correct and satisfactory answer. Then I went to LIC and I got a term policy. LIC too did a medical test.
Now my question is can we force an Ins. company to disclose the exact reason of denial of insurance. Of course a vague answer too is of no use. I am planning to apply for SBI life again as they good riders which LIC doesn’t have.
Madhab
I am not sure if you can force them to disclose the reason of rejection , but you should try that .
Manish
@Madhab – Yes, you can ASK the company to disclose the medical reasons for rejection of the proposal..Just recently, one of my client’s proposal for TERM PLAN was cancelled and the reason provided by the company is “DUE TO FINDINGS OF MEDICAL TESTs.” My client was very curious to know what these findings are..So the procedure we followed was that my client gave me a written request, addressing the branch manager, stating that she would like to know/see the reports of her medical test and the resultant findings etc..and duly signed by him..After submitting this application, my client got call from the company asking about his family physician with whom these findings can be shared..He was unable to provide any such reference and so after few days, copy of his medical tests/findings were provided to him…
I dont know how sucessful this exercise can be in your case, but i think if you seriously want to know, you can give this thing a try…
Thanks Dhawal & Manish for the valuable inputs..
I will try again this year, if it gets denied I will make sure I get a satisfactory answer.. hopefully IRDA too can help me out since now they are paying more attention..
yes
Yes, of course, you may contact IRDA and register your complaint on IRDA Portal. You will definately get exact and prompt response from any insurance company.
I am not sure about the claims Sourav is making about “No-Agent” commission involved and hence, no disguising taking place. After reading about iTerm on your blog, I went ahead and checked premium for my age for a particular coverage. To confirm few things, I contacted their helpline too and well, they had my contact number. After few days, I got a call from an agent who was trying to sell me iTerm. Just to confirm, I asked for Insurance Premium and he told me premium amount for a Smoker (without asking me whether I smoke or not). Since I was already aware of the calculations online, I questioned him back whether he gets special commission for turning people into Smokers and he hung up 🙂 !! I decided to put iTerm purchase on hold then and now with ICICI iProtect and possibility of new scheme launch, I am willing to wait for some more / better options.
VG
Thats strange , Lets me mail to sourav and ask him to clarify on this .
manish
Funny thing. I just signed up for a term policy today with Kotak.
The agent filled in the form on his own. And then was hesitant to correct it when i pointed out that my parents have high BP.
Also, I’m in between jobs right now. But the agent insisted on writing my previous employers name & address under “current employer” – saying that he cant write it as ‘in between jobs’ or ‘unemployed’. Please advise on whether that is ok.
richa
No its not ok . The first reason “High BP” is something which you should correctly mention , what if tomm you die because of some health related issue and it turns out to be something related to BP , that time if company find out that your parents had high BP , they can ask why it was not mentioned , because in reality something can be related , I am not expert on medical field , so cant be sure , but may be there is some relation 🙂
Regarding the employer information , I am not sure how it can impact , but the high level question still remains , “Why to give wrong info’ , what is the reason” ?
Manish
A background check will lend you in trouble. if agent is not ready to mention “in between jobs” may be you can wait for a month or two and sign the policy when you are settled. To opt for a shortcut just to finalise a policy is not recommended. Its very easy to sign up for policy, agent is always at your doorstep but once you have it, he’ll disappear. Claiming it is like going through hell. make sure that there are no loopholes from your side.
If your parents have high BP. get your BP checked regularly, its doesnt takes much time or money. Chances are you too will have if not now than after some time. And do mention it.
Shweta
Nice tips 🙂
Manish
GENTLE MAN,
IN THE MEDICAL QUESTIONAIRE, NOTHING IS LEFT TO YOUR INTERPRETATION. IT IS MOSTLY YES/ NO ANSWERS ONLY, IF YES DETAILS OF THE SAME. FURNISHING CORRECT INFORMATION SHALL ENABLE THE UNDERWRITER TO ASSESS YOUR RISK PROPERLY. AGENT IS A FACILITATIOR FOR YOU TO BUY AN INSURANCE CONTRACT (POLICY). HE WILL DISAPPEAR ONEDAY, (EVEN BY HIS DEATH) SO, FOR YOUR SAKE FURNISH ALL RELEVANT INFORMATIONS AT THE INCEPTION OF POLICY AND AS AND WHEN THERE IS A CHANGE IN RISK LEVEL IN YOUR OCCUPATION ETC.
THE JOB DETAILS PROVIDE THE LEVEL AND THE INCOME YOU EARN NOW WHICH IS THE PRIMARY CONCERN FOR THE INSURER. IF YOU CAN SUBSTANTIATE (IF NEEDED) THAT YOUR INCOME LEVEL WILL NOT RECEDE YOU CAN TAKE THE POLICY EVEN IN THE “IN BETWEEN JOB” PERIOD, BECAUSE THAT PHASE MAY BE SHORT AND YOU MAY BE ABLE TO JUSTIFY THE NEED. YOU CAN WAIT TILL YOU GET ANOTHER JOB AND YOU CAN USE THE PERIOD TO ASSESS THE ADVISOR FOR HIS CREDIBILITY AND TRUST WORTHINESS, MOTIVE BEHIND HIS AGENCY ETC.
V Balaji
Thanks for the comment 🙂
Manish
dear all !
very happy to see u all again.visitors have spent good time to answer with lot of both practical and theory.
welldone
thanks for the service
Srinivasu
Great to see that your queries are all answered and you are happy !
Manish
I am also an Insurance Advisor working for LIC. Such kind of agents have hidden fear that if he discloses such things in proposal form, LIC may ask for further investigation or further medical reports. I don’t think, anything wrong from LIC’s side. Actualy, agents also fear from informing client if LIC imposes extra premium. But, surprisingly, LIC gives commission on extra premium portion also, so, there is no valid reason for any agent to byepass such important information and fill up the propopsal form with wrong information. I strongly insist every policy holder to go to LIC Branch and verify his policy’s scanned copy which is available in LIC’s EDMS (Electronic Data Management System) online. IF possible, also insist on xerox of proposal form when you buy a new policy from any agent.
As someone stated above insurance co is not a chritable trust. It will do everything they can to stall the payment. Most of the policies come with a tag “No medical Check Up Required” you can see any of their ads. But the question is why ? when medical facts are going to be the single most reason for denying claims at later stages then why Medical check up is not required. Simple they want to aquire clients & want to put the onus on Customer for his health delaration. Had it been cleared at the time of inception, no confusion or dispute remains but that is not the insurers want as then the clients may show this evidence in the court so it is very cuuning on their part that they lure customers with “no medical required” pitch and later use the same thing against them to dny the claims.
Manish, One more thing that many of us maight not be knowing that it is not only imperative to declare the medical facts at the time of buying a policy but also when their is a case of revival. As per conditions most policies lapse if the premium is not paid within the 30 days (depends upon policy) of the due date. And if you pay premium after that time policy is said to be revived. Now if you have bought a policy ten years ago and delared all facts right but delayed the premium now and the policy had to be revived then you again have to declare any change in your health status and insurer can reject your claim stating the fact that you did not disclose you had developed diabetese at the time of paying premium in the eleventh year since you have paid it beyond the grace period of 30 datys. So please please please pay yopur premium on time and never let the policy lapse.
Go and check consumer court cases on insurance, most of the time claims are rejected on revived policies. In an interesting case HDFC has delined the claim of a person for critical illness even though he had a heart attack because according to insurer the heart attack will only be considered as critical illness if 30% of the heart becomes dead medically. Now while taking covers we are “supposed” to know this and pray god “Agar heart attack dena hai to achcha de varna na de” 🙂 and please check how much dysfunction of body qulifies for paralysis and which kidney should fail to get a claim for renal failure. God save us and dont watch and believe movies like Ajnabi and Race.
Pramod
Great information you have provided here about why not let policies lapse 🙂 . I have suddenly marked a post on this for future.
I think one of the other reasons why companies show “No medical checkup required” is that customers might feel more inclined to buy those as its “no -hassle”
Manish
I think if insuarance company has any doubt regarding any information given by the client, they should come up within some time limit and if required terminate the policy. This is very smarter (selfish) way from companies to wait and create problems when client dies. I assume in most of the cases families give up and dont fight.
Nitin
I dont think it would be feasible to do the ground check for each one so they rely on customer to provide right info .
Manish
@Nitin – For these things, companies have laid down various checks…I am from KOTAK so i’ll take example of Kotak life insurance…Company say if someone is taking SUM ASSURED of more 20 lakhs, he is required to fill a FINANCIAL QUESTIONNAIRE with information relating to his net worth (Value of his bank accounts/FDs/Investments/Insurance/Property/Vehicle with any outstanding Personal/auto/home loan etc..)..For age above 45 and SUM ASSURED more than 25 lakhs, medical check up is COMPULSORY..And once, i as a KOTAK AGENT, deposit this proposal form, the sales manager has a mendaroty duty to visit such clients…If SUM ASSURED is more than 50 lakhs, than BRANCH MANAGER will himself call the client and verify the details filled in the form…If you want to see this FINANCIAL QUESTIONNAIRE or MEDICAL ADDENDUM, mail me at my personal mail id at dk.dhawal@gmail.com and i’ll send you over…
So its not that companies are not doing their bit…They are fully alert to the situation but found themselves helpless when client himself has supressed the material information…
Excellent advice.
Recently, I tried to purchase a term plan through an LIC Direct Marketer. He wouldn’t let me fill the form and insisted that I just sign at various points on the form. When it came to filling up the information about family, his comment was: “Let’s just say old age as the reason for your parents’ demise. LIC won’t bother to check if the age is 60 and beyond.”
That comment broke the deal. I didn’t buy the policy.
I’ve advocated the same advice — http://www.vinayahs.com/archives/2010/06/11/the-problem-with-the-indian-life-insurance-industry/
Vinaya
Hey , thanks 🙂 . I have been following your articles for quite some time and you are writing great 🙂 . Keep it up . I am sure you can write some great stuff for this blog readers on some topic 🙂
Manish
And what if person at the time of taking insurance is non-smoker and after a year or two he starts smoking?
AlltheCrap
hm.. thats tricky , I think you will have to notify them 🙂
Manish
Yes, like updating change of adress, nominee, telephone number etc…If a policyholder picks up a habit, of smoking or drinking, he should get it notified so that there is no discripency in the status or the kind of RISK POOL he is put in..Most likely, company will put LOADING, that is hike the premium amount for the policy to continue..But these things are of critical importance so that claims can be settled with ease..any misinformation makes the company to think that there might be other information that my be tinkered or not provided and so give them reason to investigate further and thus delay the claim…
Thanks for the info
> Do they push until they comeup with some useful info to reject claim?!
The nonsmokers only amount to half the rejected claims of iterm (assuming this is the truth)!! as per last annual report of IRDA
The senior manager does have his companies image to save.
Being a fan of Shubra’s blog I believe no one (including him!!)
I don’t distrust one part of his message “Happy buying”!!
I don’t mean to offend anyone but am only truthfully expressing what I feel.
I wonder how one determines if one is a nonsmoker.
Suppose a smoker conceals this info from term policy and dies in an accident how does the smoking issue come up? Is there an investigation done by the company. Do they push until they comeup with some useful info to reject claim?!
Not many companies put up this info (LIC does). I think the nominee can use it in such cases. Some expert must clarify.
Section 45 of Insurance Act, 1938:
No policy of life insurance shall after the expiry of two years from the date on which it was effected, be called in question by an insurer on the ground that a statement made in the proposal for insurance or in any report of a medical officer, or referee, or friend of the insured, or in any other document leading to the issue of the policy, was inaccurate or false, unless the insurer shows that such statement was on a material matter or suppressed facts which it was material to disclose and that it was fraudulently made by the policyholder and that the policyholder knew at the time of making it that the statement was false or that it suppressed facts which it was material to disclose.
—————————————————————————–
Those who are interested in insurance fraud should see the movie ‘double indemnity”
http://www.imdb.com/title/tt0036775/
Thank god for Ombudsman. See Shurbras post about he got a term policy calim settled by going to the Ombudsman.
> Do they push until they comeup with some useful info to reject claim?!
Yes, I believe that’s the idea. Insurance companies are not charity organizations. The mainstay of their business is minimize payouts and maximize premiums. Of course, within legal limits.
This is one of the reasons I prefer LIC! They are steeped in bureaucratic sheepishness that they would rather delay a claim than reject it! A little push from the Ombudsman and they are likely to pay. Private insurers are more aggressive in investigations and the more you dig they will find something to hold onto.
Eg. For the smoker who dies in accident (see above):
Maybe they will prove that the accident occurred when he was on his way to get a smoke!
Or that if he was a non-smoker he would have survived the collision with a speeding truck!
Pattu
Nice point, the reason for rejection should always be linked with what happened to the insured at the time of dying and not random clause 🙂
Manish
Hey Pramod, new perspective you brought in to attention , about paying the premium on time. thanks
I have been reading Manish’s Articles from quite a time now & always helpful. But this point on policies & revival is new.
> Nice point, the reason for rejection should always be linked with what happened to the insured at the time of dying and not random clause.
Manish,
Above statement i am not comfortable with.Ins Companies then can come up with any reason that , even a person was not going for a smoke,his intentions are wrongly proved later to deny claim.Any random reasons can be framed then.
Chetan
You got me wrong , I am saying that invesigation should consider only facts related to what happened at the the time of dying , like Pramod said , if a person died in accident , then a company should not reject based on his smoking 🙂 . Looks like we are saying the same thing 🙂
Manish
Hi Manish,
I had smoking habit 10 years back, now i stopped smoking.Do i need to fill the application as Smoker. I asked this question some time back in your blog but i thought this is the proper place to get the answer.
Rao
yes , you should mention this
manish
Hi Rao…
This depends on the underwriting guidelines of the particular company to whom you are applying for insurance.
For example, Max New york Life, for its Platinum Protect Plan (Term Insurance), considers people who have left smoking more than 3 years ago as Non-Smokers.
So, please check with your agent or the executive of the company before answering such a question. Otherwise, you might end up praying higher premium.
Pankaj
Thanks for reply , I will use this example in one of the articles 🙂
Manish
To clarify, I did not think that your bias is unjustified. I have sort of suspected that there is a an element of scam in the insurance business; I have been falling for that scam and your writings have sort of opened my eyes to the writing on the wall.
Hemal
thats amazing to hear 🙂
manish
That is very true Manish. My take is that this is a two fold onus. Firstly, the agent has to assume that the client does not know anything and so he should take it upon himself to ask for and pen the correct details. But he does not do that, does he ?
Secondly, the client himself needs to read the fine print and be aware of what he is buying. As you rightly write, the visual appeal of buying a consumer durable makes us spend time before buying it but when it comes to documents, we get bored or uninterested to read them.
In my opinion, the responsibility is more with the client than the agent. Unless until the client demands correct data to be jotted down, he will always be taken for a ride. Which leads to a bigger problem at hand – financial awareness needs to go up big time and the financial awareness in this country is not going to increase by a few certifications that FPSB runs or a few advertiement that IRDA and SEBI publish. I am sure you can write a book on that 🙂
Radhey
Agree that the biggest responsibility comes from customers and not from agents , he have to understand that their is conflict of interest in agents part , he makes money through selling , so definately at some point he is bound to cheat or do things which maximizes his intake 🙂
manish
i bag to differ slightly with you Manish..There is one principal of insurance called CAVEAT EMPTOR (Let the buyer beware)..I as an agent will be telling my client as much as he wants to know from me, nothing more & nothing less..And so nothing to do with discharge of my duties as an agent with CONFLICT OF INTEREST by fleecing the client/customer..In most of the cases, they themselves dont want to reveal their medical history or some medical illness/complications related to their family…
To quote you from REAL LIFE EXPERIENCE, me as Kotak Life Insurance agent is required to get a FINANCIAL QUESTIONNAIRE filled from the client if the SUM ASSURED is more than 20 lakhs and would you believe, not even 10% of the public is open to share their information about their bank balance, FDs, property value, investments etc..They are skeptical that this information might be handed over to IT department etc..They even ask me what is this information got to do with the INSURANCE POLICY??
So would you say i am wrong in filling this form by just the vague idea provided to me by the customer to get this policy issued, to get my COMMISSION???
Even in mediclaim policy proposal forms, when i am asking the client to tell me if they are suffering from any pre-existing illness, what most of the people say is YES but dont put it in the form..Because we are taking this Mediclaim only to claim for this particular illness only or that we have SETTING 🙂 with the doctor etc…
To me, its not cheating or doing anything which maximise my intake..I am just going by what my customer is telling me to fill irrespective of what i have told him or warned him of the consequences of…
@Radhey – there is still a last resort for client..If he still finds the policy or terms/conditions unsuitable, he can get his policy cancelled within FREELOOK PERIOD..
Dhawal
hmm .. You are correct from professional point , however I am more talking from moral point. You are correct that people do not want to share the right information and hesitate to share it . however we are trying to change that only 🙂
Manish
Hi Dhawal,
For Insurance contracts, the Principle of Utmost Good Faith Applies not Caveat Emptor.
The principle of Utmost Good Faith (Ubremma Fides) requires both parties of the Insurance Contract to deal in good faith and in particular it imparts on the insured a duty to disclose all material facts which relate to the risk to be covered.
We may discuss on this more.
Manish,
Fantastic topic once again!!
As always the devil lies in the detail, isn’t it ?? so, here are few question to Mr. Sourav Shah.
1. How does the insurance company identify if a person was a smoker after his death ?
2. How is this situation treated in case of group insurance from employer? Because mostly the employees don’t feel any exclusive document/form, right ?
3. Aren’t some of the questions just dumb in the form like
—
(c) Have you remained absent from place of work on grounds of health during the last 5 years?
—
Tell me a person who hasn’t for cold,fever etc…?? how can this be related to insurance ? Or are these kind of questions designed with the intention to just fox the public into giving some wrong answers ??
Regards
Raja
Sorry for the typo, i meant ” ‘fill’ any exclusive document/form”
I have mailed him , let see if he comes back with answers
manish
Hi Raja,
You have some genuine queries, Let me try to answer these :
1. The company would try to identify that if the Person was smoker, only in the case if he/she dies due to health related causes which may be caused by Smoking. They do so through investigating mostly by accessing the past medical records.
2. This is the advantage/disadvantage of group insurance, every person pays the same premium, so the people having smoking habits pay less premium than they should have, and the non-smokers pay more. however in case of Group plans, the Premiums are considerably lower than the individual plans hence it is beneficial for everyone.
3. Mostly this type of question specifies a time period of 15 continuous days or 30 continuous days, hence combined with this time period these questions makes sense.
Pankaj
Thanks for the replies .
Manish
true.
wellsaid.
Insurance contracts are based on ” utmost good faith”
even after death a smoker’s lip will be ‘burnt’ due to the heat it is regularly treated with.
group insurance policies are given to homogeneous group and average premium is calculated on the general risk the group is exposed and the average age of the group. it is ‘ one year renewable term insurance’, hence premium is less.
questions about health is to know if the insurer can cover the risk of the disease, deformity, body condition after a treatment ( operation etc) of the insured with any extra premium after suitable examinations are done on the insured. all the questions found in the proposal are time tested and relevant to suspect its need is not good because if such questions are withdrawn the risk of the ‘ insurer will be more and insured may be forced to pay more premium.
hospitalization details help in finding the general health condition of the ‘life proposed’.
You certainly are unbiased. You speak not only for the insured but also for the insurer. Keep up the good work.
🙂 , why did you think earliar that I am biased 🙂
Manish