Check policy before sealing it

Pushpa Girimaji

Three years ago, an insurance agent approached my wife, who was an executive in a private company, for an insurance policy. He said that if she paid an annual premium of Rs 1.25 lakh for five years, she would receive a monthly income of Rs 4,000 for 15 years. He also said the policy gave her a life cover for Rs 6 lakh. My wife had been diagnosed with cancer a year before that and she had undergone surgery. She informed the agent about it and he said that did not matter. She took the policy and paid a premium of Rs 1.25 lakh for two years. Unfortunately, cancer recurred and this time she did not recover. The insurance company is now refusing to pay the insured amount, saying that my wife had concealed the information about her illness in the proposal form. My wife had trusted the agent and signed on the form filled by him, but obviously he gave false information. What do I do?

From what you say, the agent has deliberately concealed the information about your wife’s health status in order to sell the policy and earn his commission. This is a very serious offence. You should lodge a complaint with the insurer as well as the Insurance Regulatory and Development Authority of India (IRDA) against the agent. You must also tell the insurance company that they have to take responsibility for the fraud played by the agent and pay the insured amount.

First, as per the code of conduct for agents drawn up by the IRDA, he is expected to tell the prospective buyer about the importance of disclosure of material information in the proposal form. Second, he is supposed to bring to the notice of the insurer, any material fact that may adversely affect the underwriting decision. Instead, he has concealed the most crucial information given by your wife. He has also violated the IRDA (Protection of policyholders’ Interests) Regulation, which says: “Where for any reason, the proposal and other connected papers are not filled in by the prospect, the insurer or the distribution channel shall explain the contents of the form, and a certificate shall be incorporated at the end of the proposal form from the prospect that the contents of the proposal form and connected documents have been fully explained to him and he has fully understood the significance of the proposed contract.” Obviously, this was not done by the agent.

The insurer is also at fault because from what you say, you have not seen the copy of the filled proposal form. As per the IRDA (Protection of policyholders’ Interests) Regulation, the insurance company has to furnish to the insured, a copy of the proposal submitted by the insured, free of charge, within 30 days of the acceptance of the proposal. Obviously, this was not done or else you would have noticed the fraud.

Point out all these factors and demand that the insurance company pays you. If it does not agree, lodge a complaint before the Insurance Ombudsman or the consumer court. The apex consumer court has held that violation of the IRDA regulations constitutes deficiency in the service rendered by them and a consumer who suffers loss on account of such deficiency is entitled to compensation.

What kind of precautions should one take while buying a policy?

First and foremost, I would urge you to see the website meant for policy holders created by the IRDA (policyholder.gov.in). That would make you aware of the various regulations meant for the protection of policy holders and your rights as a policy holder. Secondly, always fill the policy yourself. I know it’s tedious work, but do it. If the agent fills it for you, then read it carefully and make sure that the information given is correct. Remember, any false or incorrect information or even non-disclosure of crucial information pertaining to your health could result in repudiation of the claim. Also, keep a photocopy of the filled form before submitting it. And make sure that the insurer sends you a copy of the proposal form. Read that too carefully and ensure that it has not been tampered with (because there have been such cases) and keep the document safe along with your policy.