Twenty nine year old Lalit Kapoor is working for a MNC software company in Pune. He is an internet savvy guy and do most of things online, like banking, billpay or shopping etc.. So when it comes to buying insurance, he did some research himself by browsing leading investment websites, blogs and surfing forums and found out that online buying option directly from the insurance company’s website is the cheapest option. So he bought a online cheapest term policy. But did he bought the right product for himself?
What things, we need to keep in mind before making a online buying decision?
1- Personal Details
Please mention in details about following points –
1. Details of the Life Insurance Policies held / Proposals applied for by the life to be insured
2. Personal health details of the life to be insured and proposer (Details for Proposer to be filled when there is Sum at Risk on Proposer’s life)
3. Family history of the life to be insured
2- Premium Payment
In online buying option the policy premium payment reminder mostly comes thru email (no personal reminder, as no agent). I would suggest to pay premium by ECS, Automated Credit Card, VISA bill pay, so that the insurance premium directly paid on time.
3- Read and understand proposal declaration before you sign
In the proposal form you will find a proposal declaration like below –
“I hereby declare, that I have not consumed tobacco in any form (smoking, chewing etc.) during the past 12 months and do not have any intention of consuming tobacco in any form in the future. I am aware that any false statement regarding my use of tobacco would render the contract void and lead to loss insurance cover.”
Read the declaration and understand the meaning, if you won’t satisfy the condition please check with the customer care of the insurance company before proceeding further, because it will have a direct impact on the claim.
4- When the life cover will start?
The life insurance cover won’t start instantly. Life insurance cover will start as soon as the premium is realised by the Company in non-medical cases. However, post submission of the form, if it is found that the customer has existing policies which have not been disclosed and due to increased sum assured, medical examination is required, the Company will cancel the policy subject to the provisions of Section 45 of the Insurance Act, 1938.
What is Section 45 of Indian Insurance Act 1938?
No policy of life insurance effected before the commencement of this Act shall after the expiry of two years from the date of commencement of this Act and no policy of life insurance effected after the coming into force of this Act 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 statement made in the proposal 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 policy holder and that the policy holder knew at the time of making it that the statement was false or that it suppressed facts which it was material to disclose.
Provided that nothing in this section shall prevent the insurer from calling for proof of age at any time if he is entitled to do so, and no policy shall be deemed to be called in question merely because the terms of the policy are adjusted on subsequent proof that the age of the life insured was incorrectly stated in the proposal.
5- Freelook period
Freelook period vary from 15-30 days depending upon the policy and premium payment option. A period of 15 days is available to the policyholder to review the policy. If the policyholder does not find the policy suitable, the policy document must be returned to the Company for cancellation within 15 days from the date of receipt of the same.
6- How much charges in case of cancellation within freelook period?
On cancellation of the policy during the freelook period, insurance company normally return the premium paid subject to the deduction of –
1- Insurance stamp duty paid under the policy,
2- Expenses borne by the Company on medical examination, if any.
The policy shall terminate on payment of this amount and all rights, benefits and interests under this policy will stand extinguished.
7- Disclosing Material facts
Most of us forgot to disclose material facts, after buying any insurance. Any personal or professional details, which may impact the risk. Like change in living condition or change in job etc.
What is material facts?
Facts that would influence the insurer when deciding whether to insure you or not and the terms and conditions they want to apply. If you are unsure whether it is a material fact you should disclose it anyway.
1- Suicide clause
If the Life Assured, whether sane or insane, commits suicide within one year from the date of commencement of this policy, no benefits shall become payable.
Where the policy is reinstated, no benefits shall become payable if the Life Assured, whether sane or insane, commits suicide within one year from the date of reinstatement of the policy.
2- Other conditions
Also check some specific conditions to that policy. Example – Met Life’s – MetSuraksha ; “These would be no restrictions on travel except to areas notified by local governments for ‘Travel Advisory’ risks.”