Insurance claim rejected?
While filling up a Mutual fund form you are filling up an OFFER DOCUMENT – the mutual fund is making you an offer and you are filling up the form and giving a cheque. If your cheque goes through, the CONTRACT IS COMPLETED.
In case of INSURANCE, you are filling up a PROPOSAL FORM – you are proposing to the insurance company. You are saying ‘this is my name, this is my health, this is my income,……so please accept my form and issue me insurance.’ If your cheque is valid, the insurance company will call you for a process of underwriting.
Please remember the word Offer, acceptance, Proposal and CONTRACT come from the Indian Contract Act, 1872. Thus you are filling up a very important contract – more with insurance than with mutual fund perhaps. It is ABSOLUTELY necessary that you fill in the TRUTH – and not let some stupid, idiotic, half literate agent of wealth manager fill up the form. I am hearing of too many cases where the agent / bank manager found it convenient to hide illnesses – AS MUCH AS A CANCER PATIENT (with cancer having been treated successfully) was hidden. Obviously the claim was not paid (he was a celebrity from the film industry).
PLEASE do remember if you tell a lie on the insurance form, YOU ARE LYING to the beneficiary (parent, wife and / or kids) – because the CLAIM will NOT GET PAID. Insurance companies do not like to pay claims. Telling lies on the form is the stupidest thing to do – and a suggestion that many many agents will happily give you.
Moneylife Foundation (Debashis Basu and Sucheta Dalal) are organising a seminar on 10th Dec. at Dadar…in the morning. See if you can make it….I will not be able to make it, my loss 🙁
Ajay
Subra
if a person quit smoking three years ago should he still be regarded as smoker while filling insurance form.
There is only one option, either you are smoker or non-smoker.
Which category a ex-smoker falls.
subra
ask the Underwriter, NOT THE SALESMAN. Once a smoker, always a smoker – from an insurance point of view…so worth saying the full facts
Puneet
Absolutely!
What is the correction cource to be taken in case I know one of my old policy does not expose all the facts. Can I ment the policy now, or the only option is to go for a new policy with all facts updated?
How about, say someone suffers from cancer after the policy is in force? How is the dependent going to proved it? Or for the matter insurance company going to prove that the illness was pre-existing and not caught after the policy enforce date.
I think it’s almost always going to be a dispute between dependent and insurance company for term insurance claims; Only way is to empower your dependents with knowledge.
subra
assume that the old policy will NOT GET PAID…Take a big term cover, NOW..for the whole amount that you need. Then if one of your old policies do not pay, it will not matter.
krish
I wish in our country to see a system once the premium is accepted by the insurance company, it should be held liable to pay to the customer. Let the insurance company takes the accountability be it scrutinize thoroughly and do the exhaustive medical tests in the beginning to make sure that everything is alright prior accepting the first premium. Why launch detailed investigation with all the resources to reject claims. It would save lot of headaches for everyone.
The agents always fears that their commission gets spoiled if the application do not get through. These agents wants a smooth ride in quick time and customers are victimized. In our country, blaming the customer for false declarations has become common. These days hardly any protection for the ordinary customer. Yes, we need blanket protectin for the pubic.
Suresh
Insurance is a subject matter which will always be an adverserial relation. Why? Because invariably (less so in Life insurance, but still there..) it is the only business where the product is priced AFTER the sale. Both buyer and seller keep guessing whether it is the right price, especially on things like health and motor insurance.
Thus one must assume insurance companies will try to reject a claim if they can find a technicality. However, unlike mortgage companies, you can ask for a draft contract copy (policy document) BEFORE signing up. Please read the EXCLUSIONS first.Finally there is the principle of Contra Preferendum – since the insurance company writes the policy document any grey area will be intrepreted in favour of the insured. But you have to fight for your rights. Would it not help to be best armed for the fight by filling the correct data in the application/proposal form?
CodeRed
Agents should never be allowed to write the proposal form! Till this date i have not come across any agent life or general insurance who does not have sab chalta hai attitude.
CodeRed
I think in most cases, lack of knowledge on the consumer side and agent is the culprit.
Muthu
Good article. It is high time that people realize that having a policy suppressing certain facts is as good as not having a policy at all. Here you loose on 2 counts: the claim in all likelihood would not get honoured + the premium paid is a wasteful expenditure.
subra
krish – insurance is a contract of utmost good faith. There is no pardon for a liar. So if somebody has lied on the form, he/she deserves to suffer. Such a person is cheating the society, and well he will pay the price. No way how a company can do a full medical check up and find out whether a guy smoked 3 years ago or no. They may not even be able to find out if he had cancer!! Cheaters pay the price, simple.
Karan
“No way how a company can do a full medical check up and find out whether a guy smoked 3 years ago or no. They may not even be able to find out if he had cancer!!”
How do they prove it at the time of rejecting a claim?
IMO a full medical check up (and background check up) must be done to justify all the required information while issuing the policy. The cost of the tests may be shared by the customer and the insurance company. But once a policy has been issued the claim must not be rejected on the basis of wrong information provided. Customer may not even know if he already has got some ailment while applying.