Jagoinvestor
December 31, 2012
Why you should fill the Insurance Policy form yourself ?
If I ask you to fill an application form that has 10 Objective questions and 10 subjective questions, would you consider filling it up yourself? NOPE!
Similarly, while taking a life insurance or health insurance policy (term plan, ULIP, Endowment, Health Insurance), we are lazy to fill up the form ourselves. Why? Obviously because it’s too much of work . So, agents take up the task of filling up the form and now the power is in their hands. Some agents, whose whole focus is on their commissions, make sure that no information is disclosed which can lead to policy application rejection or increase in premium etc. just to make sure the policy is issued quickly (hassle free). They will chose ‘NO’ in for all the questions like “are you a smoker?” -NO, “Do you have any illness?” NO, “Did your parent die because of any serious illness” NO, etc etc… and you don’t even bother to check it out. You just put your signature as you are already in hurry to submit the documents for tax claim in your office.
Claim Rejection due to wrong Information in Form
This is a serious issue and your claim will be rejected because the information provided in the proposal form is wrong, because you never followed the procedure to buy insurance properly. So make sure that you fill up the form yourself or in worst case let your agent fill it up, but check each and every point before submitting it to the insurance company or let your agent fill it one by one and tell him what to fill at each place i.e. dictate your answers.
Let me share with you some cases where agents filled up the form and what were the experiences of different people
Case 1 : I have sbi life saral shield term insurance plan of 15L for 30 yrs term for which i m paying 4953/- premium. After reading this article, i have gone through my policy document in which they have given scanned copy of filled up form. actually agent has filled up the form. i m a smoker but in the form it shows non-smoker. – Alpesh
Case 2 : 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. – Vinaya
Case 3 : 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’. – Richa
You can see that in all these cases, the agent tried to fill up information without even discussing it with client. May be they are used to it and are very sure that even clients don’t pay any attention to it, but at some point of time it’s going to hurt you very badly.
How many of you have/did not fill your proposal form or never checked your proposal form and what information was given in that? Note that it’s your proposal form, so whatever is mentioned there is given by you and only you, irrespective of who filled it.
Kindly share your cases and experiences
Dear manish,
i have take a term insurance plan from aegon religare last year of Rs. 16000000/- via online purchase. after receiving the policy document ,it was found by me that a clause is there which states te rejection of claim in case of payment by any account other then yours. At that time ,i paid the amount by using my borther’s online account.I am a mariner and policy will lapse in 2056. My premium will be due in 1st week of march.Kindly advice.
Hi Raj
That actually does not make much sense to me . I just checked the policy document brochure online for Religare and I could not see anything like that which you mentioned. Can you send me the exact wording in the brochure ?
Manish
thanks manish for the promt reply,will send the details exactly.
Dear Manish,
There is a proposal to amend the Insurance Act 1938 and one of the amendments is regarding Sec 45 which is now proposed that “The period during which a policy can be repudiated on any ground, including misstatement of facts etc. has been confined to three years from the commencement of the policy and thus no policy would be called in question on ground of misstatement after three years.”
Which means that whatever may be the reason, your claim cannot be repudiated on any grounds once the policy is older than 3 years including fraud and mis statements. Am i correct on this
Also if the bill gets passed in the parliament will it be applicable to only those policies taken after the bill is passed or to all existing polices which were in force at the time of passing the bill
(I have a Term policy with LIC for the last four years and i am not sure that if the agent has filled the details correctly)
Thanks in advance
Sandeep
I have not looked into the bill, but if its comes then it will be applicable to only new policies for sure ~
My experience with Click2protect where HDFC told me bluntly that they cannot incorporate all my disclosures (health etc.) in the policy document makes me believe that-
1. The much clamoured about ‘give personal health data honestly ‘is something the insurers least bother about. What they really care about is collection of premium only.
2. They are much smarter than us! By placing an online software which accepts the proposer’s health details but omits most of the material information while printing, they deliberately leave some scope for rejection of claim.
5. It looks that insurers in the name of term-plans are selling a false sense of security to thousands of young people –the web-connected and well off people. Such an insurer will not bother if a few people like me -honest and transparent, aware and demanding (pardon my arrogance), back-out and return the policy in the free-look period.
Saket
Thanks for sharing your experience. I think HDFC should take this as feedback and explain it to you ..
Yeah, I agree to this one.
My Dad had done a LIC insurance on my name and the agent filled up with a totally wrong spelling of my name as per his wish despite the fact that we gave him the id proof and stuff.
10 years later, when the maturity came up, I had to get a affadavit from the court that my name is X and not Ex as spelled and certain other clauses phew! Took around 2 days and finally got my money.
So a minute of hurry cost me 2 days of valuable time.
Sid
Thanks for sharing that with all of us. It really calls for an article 🙂
Thanks Manish and Dhawal for your timely suggestions.
HDFC service helpline guy has now told me to visit their office, submit all information (which I want to be acknowledged) on a sheet of paper, and ask for acknowledgement.
Don’t know whether the local office guys would oblige me (Usually the ”offline guys” are not very keen on troubleshooting online policies).
But I am not going to leave it like this. I have been honest and transparent in declaring my information, and I expect them to be honest and transparent in acknowledging it. I will share my experience with JI readers after I visit them.
While I fully endorse Manish’s advice on filling the form by yourself, I wish to share with JI readers, a further learning from my experience about the on-line mode of application. Only filling of form by yourself is not sufficient. Do check your final policy bond to see if all the vital information you declared, has been properly captured and acknowledged or not. Especially for HDFC Click2Protect, which seems to have some flaw in its online system, which allows you to key-in your full details about self and family health history, but does not fully print it in the policy document.
Great .. keep us updated on this
Dear Manish,
First of all a very big thanks for all the good work you are doing through this website..!!!
I have few doubts .. Pls help:
1.) I am a seaman by profession and wish to know that if I can go for the term insurance, and will it cover me when I am working onboard foreign going ships as crew.
2.) For a cover of Rs. 60Lac + Rs 10 Lac (partial/complete disability rider) + Rs 5 L (critical illness rider) for 30 years. I have finalised three companies: Kotak insurance ( Rs 10300 premium p.a.), SBI life (Rs. 12100 p.a., in which CI rider is renewable every 5 years) & Bajaj allianz ( Rs 12300 p.a., which also includes Rs. 2.5 Lac cover for hospital expenses also)
SBI Life has an advantage and offers single premium payment of about Rs. 1.1 lac for 30 years but CI rider is renewable every 5 years in which premium will be updated with time.
Bajaj allianz also provide hospital cover for Rs. 2.5 lac in same premium but is a private player like kotak.
3.) Pls suggest should I go for one time payment with SBI life and renew CI rider every 5 years, or I should go with Bajaj allianz with hospital cover. Or Kotak with minimum premium is best
Considering 30 years of period, can I trust private companies that they will not be affected by recession in future…???
And last but not least.. I am 26 years old right now.. Should I take 30 years term insurance now or wait more.. I am not married at present.
Thanx in advance…
ALready replied you on facebook
Dear Manish,I am thinking to take Term Insurance Plan..So I am confused. I would like to take 50L of risk cover.. should I go to the bank which do medical test before issuing the policy and which bank I should approach …
Why Bank ? You can take it from a company which is not a BANK like Aviva or Metlife ! ..
Manish, Thanks a lot for the reply..do you think Aviva or Metlife will be safe for investment for long run. However I have seen the company are not doing any medical test for 50L , so how it will effect for claim settlement, as the company agreed to give 50k cover without doing any test.
Yes , below 50 lacs most of the company dont do it .. above 50 lacs they do .. its true for most of the companies .
Manish,
I had asked a question, relevant to the subject of this article, (on 17th Jan as a reply to Dhawal’s comments). Manish, can I get your opinion too on my case?
Dhawal reply is final , I only asked him to reply as he is an expert
Thanks Manish Sir, for educating us in Financial.
Good Article..
Recently i took Term Insurance Policy from LIC.
I submitted all my document to my agent & I signed the all Pages, when i went to LIC office for Insurance Payment, I asked my agent to show me the filled LIC form.
Handwriting is not clear, I couldn’t Understand what is written YES/No in few column. I asked my agent to explain why it written as yes/No for all column.
He refused to spend his time with me, I told him to give a new form i will fill all the column once again. Then only i will submit the form.
In few column, Agent couldn’t explain to me, He told me that his BOSS filled the form, then i took my form to his boss for Explain-nation.I told him that if this details are not proper my CLAIM may Rejected in Future. I am ready to spent my time to fill this form.
Pls Re-check your form once/twice before you submit it.Fill your Form by your own in Capital Letter with your help your Agent.
If not purpose of taking the Insurance may go as Meaningless.
Mathi.
Dear Manish,
Impressed with one of your articles which conveyed that a ‘Medical-test policy’ (usually for SA of 50L or more) has advantages over a ‘Non-medical-test’ one, I applied for HDFC Click2Protect for a SA of 50L. I alreday have an ICICI Pru iCare which I am not very confident of (‘casue its a No-medical-test policy), and wanted to replace it.
I filled up the on-line forms very carefully and painstakingly, giving every possible detail of my health etc. (I owe my awareness to Jago Investor and your book on Term insurance). Then they asked me some additional health details about one of the ailments I suffered in past. I gave the details truthfully enclosing my doctor’s prescription and some test reports. Then I waited for the a call for Medical Test.
Then came the surprise! They called me tell that the policy has been issued to me! No medical required!
I don’t know whether to be happy or be disappointed. I needed a policy with medical tests. (And that’s the reason I had applied for SA of 50L).
I am flabbergasted to think that some isurer can issue a 50L term policy without even checking my blood sugar levels or Lipid Profile! (N.B.-I am 40+)
My questions are-
1. Can I trust this policy?
2.What should I do now? I have two options-
(i) Trust the policy since I have given every detail of my health correctly in the form and subsequently upon being asked.
(ii) Return it in the preview period of 15 day period and try some other insurer for a Medical-test policy.
Thanks and Cheers for Jago Investor!
Hey Raj,
As long as you gave honest and correct answers/details in the proposal form, no need to worry further. You can continue the policy , it’s my opinion.
-SSR
Thanks Shankar for your views.
That can only happen when people will understand that they are buy a product which will cover RISK and is not an INVESTMENT, till then such ignorance will continue.
Very true ! .. thats the base !
Except LIC, every other insurance policy bond has an “in-built” photocopy of the form filled while applying for insurance..Every one should go through the policy bond immediately on receiving it, and besides checking the correctness of the MAJOR DATA (Date of Birth, Premium mode, Policy term, Self and nominee name spellings etc), everybody should also focus on the OTHER DATA by glancing through the photocopy of proposal form in the policy bond (Height, weight, smoking status, family and medical history etc..)
Don’t know how will someone check it if he has taken LIC policy??
Is LIC not suppose to give back a copy of the filled in proposal form to customers ? It will have those information , right ?
No..LIC policy is just a 4-page booklet and nothing else..An LIC policyholder dont have any means to check whether the information filled in the proposal form is correct or not as there is no photocopy available with LIC policy..
So much for LIC and its transparency 😉
Thanks for that info 🙂 ..
That’s a problem with LIC. I walked in to their customer -direct office seeking a copy of my Form. They told although they have it as a scanend copy in their server, they cant’ let me have a copy. they cited their policy of not providing the proposer with a copy. Don’t know if it was a corporate policy or pure indifference of people there.
Dear Raj,
Yes, its an INSTITUTIONAL policy at the LIC end..They have not been providing the PROPOSAL FORM copy as has been the case with ALL other companies in the market..No need to expect any change in their system/way of functioning in the foreseeable future either..
Dhawal / Manish,
Trust you can guide me on this.
The “in-built” photocopy of the form is a very good way of acknowledging the information revealed by the proposer.
I have just now received my Policy document of my HDFC Click2protect; and it contains only half and truncated information provided by me in the on-line application-form. eg. I mentioned my mother suffers from “Diabetes and Hypertension”. However, the built-in form shows only ” Diabetes a”. Similarly,I had revealed that I had suffered in past from “Gastro Eusophageal Reflux Disease, Oesophagitis, Hiatus hernia, and Laryngitis”. Only the 1st five characters ” Gastr” have got printed in the built-in copy.
Now if I die of hypertestion or Oesophagitis related disease tomorrow, HDFC SL may repudiate my claim saying that I did not reveal this vital information!! How will my family prove that I had honestly revealed all material information?
HDFC SL says that due to space limitations only 4 or 5 characters get printed on the form. Funny!!
I had revealed my complete health information, even the minutest details also, but am very disappointed to get no acknowledgement of the same in the policy document.
I am dilemna now, whether to retun the policy in the ‘Free Look period’ and go for Aegon Religare, who I heard, give good acknowledgement of information put in the application. (My friend told they even made, copies of e-mail correspondence a part of policy document).
What is your opinion? Shall I return the policy or am I just being too cynical?
P.S.- Its a 50 Lakh SA policy. They did not ask me to undego any medical tests. So the policy is based on solely my declaration/ information provided in the form.
Dear SAKET,
to me, the matter is of concern, although only to a very little extent..As you have put it that photocopy of the form shows GASTR instead of the complete information, to that extant NOMINEE can always say that you have disclosed medical condition about GASTRO and its not been entirely captured by the system..
What matter more, to me, is that a 50 lakh SA policy has been issued WITHOUT ANY MEDICALs and that too where MEDICAL HISTORY is patchy..In offline, this type of SA and Medical history would most certainly have attracted MEDICAL TESTs..
Best of luck on that, although HDFC has come on TOP with its claim settlement ratio amongst PRIVATE SECTOR companies with 96.8% in the latest IRDA annual report..
As for your argument for AEGON RELIGARE, they might give you better acknowledgement than HDFC but what about their pathetic claim settlement ratio at 66.1%??
And yes, i still maintain that best way to go for such financial instruments is through a professional HUMAN ELEMENT (Read it as AGENT)..After all, its the agent who is again clarifying your doubts 😉
how about choosing an online term plan. The agent is not there and you can fill in the details correctly.Has the online term plans improved ? How about the claim settlement rate of online term plans vs offline ones ? manish, can you comment ?
Biju, See my comments on this blog (on Jan 17th and 20th)to know what happened when I applied ONLINE for HDFC Click2Protect.
Dear Manish,
I was aware about the correct information to be provided in proposal forms and rejection of claim. Thanks to your previous articles.
I bought two term plans for One Cr each from Birla Sunlife and SBI Life.
In one of them, I found that I have been shown a graduate and in another I am shown as 10+2. As I am in Merchant Navy and have cleared my Master’s exam (Captain’s License), notionally my qualification is considered as graduation, but not approved from UGC till I get the certificate from Mumbai University. The only university who extends Graduation certificate (Graduate in Nautical Marine) to mariners who have cleared the Captain’s Exam, basis submission of legal fee only and we dont have to appear from any graduation exams.
Till now, i.e after 6 months of taking the policy, I do not held this certificate.
Is it a big fault that can render my claim rejected in future? Can you or somebody from the readers advise me what would be the correct action to rectify the mistake (if any)?
Thanks
Mayank
This does not seem to be such a big mistake and issue , however to be on safer side I recommend you talk to insurer and inform them about it and also ask what needs to be done .
“They will chose ‘NO’ in for all the questions like “are you a smoker?” -NO, “Do you have any illness?” NO, “Did your parent die because of any serious illness” NO, etc etc… and you don’t even bother to check it out. You just put your signature as you are already in hurry to submit the documents for tax claim in your office.”
Every word in above paragraph is true. It is unfair to publish false information in application/proposal form. Because poor insurance company cannot calculate right premium for its customer. So if a customer is trying to escape high premium he will do the same. It is also possible to make a unwilling mistake when your agent is filling the form. So it is always a good practice to fill these form honestly by the customer himself. This is fact.
This is also fact that filling the form by self and filling it correctly will not ensure your claim will not be rejected or you will not have to go to ombudsman to get your claim.
Please get the fact right that insurance is A BUSINESS and not a govt. scheme to help you out when in distress. Every business needs profit to survive.
Profit of insurance company (let say life insurer) should come from your event of survival during policy term (lets consider term policy for simplicity). So it is also the duty of insurance company to investigate correctness of your application form even before they encash your first premium check i.e before they are entering a long contract (relation of trust as well) with customer.Do you know any company in India do this ? Nobody do this. Because they have identified another source of revenue earning. That is claim rejection. Very easy to implement. Even agents are trained in this way. They will try not to hand you over the blank application form to fill it up yourself in the first place. Even if you force they will any how try to put some conflict (you cant easily detect those until you spent lot of time educate yourself about the process). Common way are as indicated by Manish like existing policy discloser/smoker declaration etc. If you are in the policy for say 30 years and survived the same period your insurance company will NOT enquire anything in this 30 years. Investigation starts the moment you register a claim. Sounds like normal practice? But think why they should not investigate within first or second year at most of starting the policy and terminate the policy if anomaly found in your application form? Don’t your mobile simcard provider do this way? Answer is : Your insurance company also really well wisher for you and expect you to survive the tenure of 30 years and regular premium flow from you. You on the other hand servicing the premium notice with un-noticed flaw in your application form which will be the main reason of your claim rejection in case of misfortune. Do you think being correct in application form will experience a smooth claim servicing of your near and dear one when you are not around? Remember they have to legal-fight with a corporate house being an individual then. Still with little hope : being correct in application form WILL reduce the chance of claim rejection , and as a customer it is the only thing you can perform from your side.
I have experienced 1 case of claim rejection of a term life insurance policy from a private insurer when one of my senior co-worker and 1 case of ULIP rejection for a relatives death. I even have information (from one of my friend working in TPA) how in the year of 2012 health insurance company instructed their TPA to not service the claim if customer don’t apply for the same within 15 days of hospitalization. It was health insurers way to fight losses in the time of recession. All of them en-cashing the trust of customer either unknowingly or desperately.
The motive of my post is not to counter Mr Manish Chouhan saying that please be honest while filling up insurance application form. I also believe customers should be honest with their insurer. But I also wish insurance company to be trustworthy. I also wish in case of term insurance/high value insurance insurer to investigate after free look period is over for any anomaly in application form which can lead to claim rejection. Even part of cost incurred for the search can be passed on the customer.
Dear Manish,
Great Article .. I am a fan of Crime patrol ( Anoop Soni )and Jago investor (Manish Chauhan ) and i believe just like crime patrol which is doing a fantastic job of bringing awareness of crimes waiting to happen. In the same manner jagoinvestor is fighting financial illiteracy and crimes. Keep up the good work . You are saving people from a lot of blunders , regrets , disappointments .
My dastak moment was when I had taken a SBI life insurance policy .
There was a column in SBI form…Do you have any previous running policy of …My agent told me to Fill “NO” but i said i will declare true information about my previous policies and i did the same. He said ” what benefit it will give u” . I asked ” what loss it will give u”.
Readers please be careful of where you sign and all hidden details. I have lost all faith in agents because they always have a (hidden) agenda which is not necessarily in your favour.
Joel
Thanks for your appreciation .. I also watch crime petrol regularly 🙂
What you did is great and shows how responsible you are in your financial life !
Manish
What would have happened if Joel had gone along with his agent and written no previous policy? Would if any claim arose, it would have been rejected? A friend of mine already has 34 lac cover with LIC and has bought a policy with MAX LIFE two years back for 10 lac SA ( Life Partner Plus) , would his claim get rejected if it arose. His age is about 24 years. Pls advise.
One thing we loose when we get things done by others, is experience. For one, who is new to (or in the early stages of) financial learning, it makes a good value addition to do things first hand.
There are many things related to finance we outsource. This outsourcing can be due to lack of time or due to lack of knowledge. If the need is strictly lack of time and one is confident that one has the knowledge, it is OK. Alternately, if the need is due to lack of knowledge, it helps to learn and understand the nuances of the process, to avoid pitfalls mentioned.
I know of a friend who used to give his documents to a CA at the end of every year for tax returns. He did it for 15 years. Then one day, he started understanding the process and for the past 3 years he is filing his own returns and on a couple of occasions, he went to IT office to substantiate his claim and successfully got the refund due.
Thanks for a good post Manish. Wish you, your team and all fellow readers a happy and (financially) adventurous new year.
Thanks for your appreciaton and also sharing that experience 🙂
Excellent….This point is very important for which 90% people show negligence in filling the form by self….
IN my case also all my policy forms was filled by insurance agents .Out of my 6 policies, total 3 forms was signed by me after careful reading of all columns. There was a column in LIC form…Do you have any previous running policy of LIC…My agent told me to Fill “NO” but i said i will declare true information about my previous policies and i did the same. He said ” what benifit it will give u” . I asked ” what loss it will give u”
so he was answerless now
Great to know that 🙂 .. best of luck for future !
Hi Manish,
This is one of the largest reasons for claims rejections in Retail/Individual Health Insurance claims.
Great that you took it up.
Cheers!
Mahavir
I know , infact this is true for Life Insurance sector also ..
And also for life insurance sector 🙂
We discussed with Reliance Life Insurance , Senior Sales Manager Mr Amit Khandelwal that we need single premium policy , he has taken our signature on application form and advised us not to fill the forms saying that “ form is complicated and likely to be filled wrongly by you consequently form will be rejected , better I will fill up the forms , as discussed , we are doing day in out this. “
Later on , he filled up the forms in his own handwriting, he has given his own home address and the worst thing he did he has filled up regular premium payment of 5,00,00/- for 5 years despite that we decided for single premium.
Reliance Sales Mgr in proposal form filled –
Regular premium 5,00,000 for 5 years in place of single premium.
His own home address
In the proposal form – advisor’s report – advisor Megha Jakhetia signed approving the address. Where as address in the proposal form and my proof of address are different.
Signature of witnesses in the form of Rahul Yadav and Anil Singh are seems to be Reliance employee.
In proposal form of my wife “ income – 6,00,000 , source of funds –
Business and nature of duties – owner of factory “ are mentioned whereas Mrs
Bangad is simply a house wife since her marriage.
“ Non-medical “ seal appears on the proposal form but medical test was conducted and premium was raised on account of diabetes.
On benefit illustration sheet he signed in our names.
In few mails Sr Sales Mgr written to me as well to Reliance that policies are single premium. Premium notice is technical mistake , then he has written to Reliance that there is some confusion and asked Reliance to correct it etc. This confirms that we discussed for single premium only.
We have written to Reliance life – local Indore office , Customer Service , Head Central Operations and Director also etc. They have taken lot of time in responding to each of my mail finally Reliance Life written that you have not returned the policies in free-look period.
Return of policies was not possible for us as we have received policies very late , much beyond 15 days free look period , as policies were dispatched to Sr Sales Mgr address.
Even after this Reliance letter , I was keep on getting phones from local Indore office that we are discussing your case with our HO Mumbai , but off-late nothing has happened as yet.
It is a clear case of mis-selling , breach of trust, fraud and forgery by Reliance Life Insurance.
Reliance Life has terminated policies and Fund value is 50%.
Ashok Bangad
I would say complain to banking ombudsman