Insurance Proposal Acceptance Process – Some key questions are answered in this blogpost.
Table of Contents
What happens when you submit a proposal for insurance cover?
When you submit a proposal for an insurance cover, you have essentially made an offer to enter into an insurance contract. In most cases, this offer is readily accepted by the insurer. However, in certain situations, the insurer may require a medical examination report before making a final decision.
What happens if the policyholder passes away before the acceptance of the proposal? [Insurance Proposal Acceptance Process]
If the policyholder passes away before the proposal is formally accepted by the insurer, the policy conditions have not come into effect. In this scenario, the customer or their beneficiary is entitled only to a refund of the money paid towards the first premium.
Are there cases where insurers refuse to pay the sum assured if the customer dies before the proposal is accepted?
Yes, there have been cases where insurers refused to pay the sum assured when the customer passed away before the proposal’s acceptance. Some of these cases even reached national-level consumer courts for hearings, and in most instances, the courts upheld the decisions of the insurers. They strictly follow the conditions laid down in policy contracts.
Are there specific requirements when the sum assured is high?
Yes, the requirements can be more demanding when the sum assured is high. The insurer may request additional information or documentation, such as income tax returns or financial statements.
What should customers do to ensure a smooth insurance proposal acceptance process? [Insurance Proposal Acceptance Process]
Customers should ensure that the proposal reaches the insurer promptly. It’s essential to keep the agent or broker reminded to complete the process as quickly as possible. Timely submission of the proposal is crucial, especially if it’s near the end of the financial year, as agents might be dealing with many proposals. It’s also important to disclose all relevant information about health and habits until the proposal is accepted to avoid potential issues.
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Can insurers void a policy if the proposer fails to disclose relevant information?
Yes, if the proposer fails to disclose important information about their health and habits, and this information is later found to be inaccurate, the policy contract may be considered void from the beginning (ab initio). The insurer does not need to prove whether the undisclosed information was material to the risk, and they have the right to cancel all liabilities under the policy. Disclosure is crucial to maintain the validity of the policy.
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