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Responsibilities of a policyholder

- Submit claim documents as soon as possible because delay in submission may lead to delay in claim decision

Responsibilities of a policyholder


V. Viswanand

Life insurance is the business of settling claims. It is a unique product and does not offer any immediate gratification and is sold on the basis of promises made by insurers for events that may occur in the future. The policy document is a contract between the insurance company and the insured which promises payment in case certain conditions are fulfilled.

It is the duty of the agent to facilitate the policyholder’s family in completion of claim requirements, at the time of the event. That is the time when the claimant/nominee needs the help of agent and insurer the most. Life insurance above all is a contract of trust where policyholder should facilitate correct decision making by providing all relevant information (medical and financial).

Insurance is the business of covering the probability of an individual getting sick or dying. In insurance lingo this probability is referred to as risk — higher the risk higher the premium. A person with high risk paying low premium by withholding critical information is like travelling with a short journey ticket, which is liable for penalty.

However, as a customer you also have certain responsibilities. Here are some guidelines you as a policyholder must adhere to:

Correct information

While filling up your proposal form and signing an insurance contract, you must furnish all information demanded by the insurer in good faith since you will be held accountable for making a wrong declaration of material facts that impact the risk under the insurance policy. For example, if you are suffering from hypertension, mention this fact at the time of buying the insurance policy; if you conceal this material fact, in case of untimely demise your nominee’s claim may be repudiated on the basis of non-disclosure of material facts at the time of signing the contract.

Nomination

The insurance company is discharged of its liability once it pays the sum assured to your nominee(s) registered under a process established by the Insurance Act, 1938. Since a claim without a nominee cannot be settled, all insurance companies ask for evidence that the claimant is the rightful person entitled to receive the sum assured.

In case life assured has nominated somebody to get the benefits at the time of death, claim benefits are disbursed in favour of that nominee unless there is a Will provided to us (that supersedes the nomination) or there is a legal dispute. In case there is no nominee, benefits are disbursed to the Class 1 legal heirs and/or the designated heirs as per the Will or succession documents of the deceased life insured. In case of maturity claim, the amount is disbursed to the policyholder.

Documentation

Submit all documents to make a claim. The documents under any life insurance death claim fall under the following broad categories:

  • Documents related to the policy
  • Documents to prove that the occurrence of the event does not fall under exclusions mentioned in the policy contract
  • Documents to prove the identity and the fact that the claimant is the rightful nominee

An insurance company cannot settle a claim until all documents are in place. In case original documents cannot be produced, there is a process to get the documents certified and the claimant is expected to follow the process of certification of copies of all documents.

To avail maturity claims conveniently, the policyholders should continue to pay their premiums on time. During the course of their policy tenure, in case the contact details or the address changes, they should get it updated in the records of their life insurance company. While the life insurance company will communicate when the policy would be due for its maturity, the policyholders should also pro-actively track their maturity timelines and get in touch with the life insurance company prior to maturity, to close the documentation requirements, for convenient disbursement of the maturity claims. One should also keep in mind a few do’s and don'ts during claims stage for speedy and smooth settlement. Submit all the required claim documents together. Details of documents required for claims settlement and various claims forms are available with the policy pack, with agent adviser, life insurer’s offices and on almost all life insurers’ websites.

Common issues that can lead to delay are non-disclosure of facts at application stage, nomination not done at application stage, dispute between claimant and other legal heirs (e.g, wife & mother), unconfirmed cause of death (e.g., suicide cases where police may take some time to certify the final cause of death) and murder cases, where a nominee is suspected to be involved in the death of the life insured. In case of maturity claims, the delays can arise on account of incomplete documentation or the policyholder not being reachable or not approaching the insurance company for the maturity claim amount.

To sum it up — Submit claim documents as soon as possible because delay in submission may lead to delay in claim decision. Above all, disclose all the facts related to your medical and financial status when purchasing or renewing the policy and pay your premiums on time for a lapsed policy does not provide any claim benefits.

The author is Senior Director and Chief Operating Officer, Max life Insurance. The views expressed in this article are his own

 

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