LIFE INSURANCE

 Disclose true health status when buying a 

term plan

You may get lower sum assured but your claim will not get rejected later

WHICH INSURES HAVE the best claim settlement record? Apparently, all insures are doing well as they settle more than 98% of claims. Collectively, insures have a reputation rate of 0.87% in terms of policies and 3.06% in terms of claim amount repudiated, its range between 5% and 10% for many leading insurers. LIC has an acceptable repudiation ratio at 1.45% in terms of benefits. But, this should also be somewhat less.

Among the death claims, more than 85% are non-early in nature, i.e., and the claims that arise three years after buying the policies. Under revised Section 45 of Insurance Act, no policy can be called in question if three years have elapsed since taking the policy.

Claims settlement

While the average claim amount under reputable cases is bound to be higher than the average claim amount of the settled cases, if the ratio of average claim amount paid is too high , that is certainly a matter of concern, “There can be two reasons why the claim amount repudiated per policy is high for so many private insurers.  As bank employee are under severe pressure to bring business, they tend to sell high value policies (e.g. term plans) to all and sundry. When some of these policies result in early claims and investigation made by insurers reveal non-disclosure of material facts, claims are summarily repudiated.

The way out

What then is the way out? I would suggest to check the ratios of the insures being talked about here. Many financial experts suggest that young people buy high-value term plans. But many people do not know that the underwriting process for terms plans needs to very stringent. Terms plans are not allowed to people with one or two serious health issues. Bancassurance channel is generally not aware of the basic nuances of selecting lives for term plans. Some agents are also poor in domain knowledge.

What is the problem in disclosing history of diabetes or heart diseases? If you disclose these health conditions, you will not get the coverage under the term plan or coverage may be restricted to, say, RS 25 Lakh instead of Rs 1Crore. But, when you disclose your disclose your medical history, you know that there will be at least protection of Rs 25 Lakh for the family.

Select an insurer who does not repudiate high value claims under one pretext or the other. Disclose full medical history even if the insurance intermediary suggests otherwise. By disclosing your real state of health, at the most you will be covered by a lower sum assured /different product or some extra premium will be charged or some exclusion clause will be imposed for a few months. But that is much better than the entire claim getting repudiated later.

COVER FOR LIFE

Underwriting process for term plans needs to be very stringent

Select an insurer who does not repudiate high value claims under one pretext or the other

Term plans are not allowed if you have serious health issues.

For More Details: Pooja Manoj Gupta, visit www.giia26.com
Email: pmgiia26.com Mobile 9868944340