You bought a policy in 2007 for a sum assured of Rs. 25 lakhs. You have paid premia for 2007, 8, 9, and 2010 by cheque. You paid the premium for 2011 by cash. Great, the policy is in force.
In Jan 2012 you die.
The family sees the policy and calls the agent. Sorry agent is no longer picking up the phone number which you have. You do not know what to do.
So you go to the life insurance company and say….”Mr. S died on ….” please pay the claim.
The company says …’Sorry the premium was not paid, and hence, the policy was Cancelled’.
What does the family do?
They search for the receipt – and of course they cannot find it (record keeping by Indians is pathetic esp if they are born after 1945)…..
Believe me, as of now there is NOTHING to say that such a thing cannot happen. You have no protection.
Once upon a time companies had to maintain a physical record of the policies issued. Now even if it is maintained it WILL BE ELECTRONIC. These records can of course be manipulated….so what do you do? Twiddle your thumb.
Is there a solution? yes from IRDA’s side the solution is simple, the Register of Members should be audited regularly and the Electronic copy should be kept with IRDA on a weekly basis. Cancellation, modification, etc. should be filed separately and proper processes and forms should be maintained.
Is there an even simpler solution? yes of course, dematerialise the policies. If I have a policy – term, endowment, medical…I should be able to hold it in electronic form. Simple. I will be able to access it any time….and there will be a third party affirmation of the policy.
What will the Industry say to this?
OMG our costs will go up.
OMG you are increasing our work load
Why do you need it? after all in the MF industry it is optional is it not?
Proof that the policy has been issued is available with the client no? why does he need more proof?
Will it happen? You know my views about the regulators, right? So the answer is right. NO. I do not think it will happen, well at least not in my life time (2025 circa)….
IS THERE A SIMPLE SOLUTION?
YES. Write a letter to the life insurance company saying you want a letter saying that all the due premia has been paid, it is a policy in action….and there are no dues outstanding against the policy.
Who should do it? when you are alive it is YOU – the company only recognizes YOU.
Is it a dangerous situation? the answer is yes……
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