The Buyt Desk
Praveen saw his friend’s family struggling to claim the term insurance after his demise. The insurance company claimed that the deceased had hidden his previous health condition while buying the insurance. There was a non-disclosure in the form and his insurance stands to be repudiated or in simple words rejected. This was an unfortunate situation for the deceased family. Firstly they were going through the pain of losing a dear one who was the breadwinner of the family. Secondly, the hope of getting the sum assured claim were thin.
This is why it is important for you to understand the grounds which can lead to insurance claim rejection. Every insurance buyer must understand Section 45 of the Insurance Act. The purpose of this rule was to benefit the consumer but on the contrary, it is being used by the insurance company in their favour. As per Section 45, any policy which is more than three years old cannot be questioned on any ground. Even if the policyholder has shared some wrong information or has hidden some facts then also the company must approve the claim. The company only has the right to investigate only if the policy is less than 3 years old. After 3 years policyholders can’t be questioned. But do note that the 3-year time limit will apply from the commencement of the policy or from the revival date of the policy. If you miss the premium payment deadline and the policy lapses then the new date of revival will be considered the starting point of the policy and not the original policy issued date.
How is Section 45 manipulated?
If a case arises when the insured dies within 3 years of purchasing the policy the company and its third-party administrator have the right to investigate. It is in these investigations it has been found that insurance companies try to look for reasons which can help them to reject a claim. In a case, the deceased person never had any record of any disease or condition but he was admitted to hospital when one of the antibiotics didn’t suit him and it reacted. But after a few years when he died of a heart attack the insurance company rejected his claim due to the prior hospitalization record. . Now his heart attack and the hospitalization for a reaction of medicine has no connection. But the insurance company made this the reason for rejecting the claim. Despite section 45 of the Insurance Act clearly telling us that if the insured buyer has spent 3 years then companies must pay the claim but the ground realities are different.
Never Forget 5 Disclosure in Your Insurance form
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Health – Any pre-existing disease or any kind of hospitalization must be declared in the insurance form.
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Habits- Habits like smoking or drinking should be informed as this will have an impact on the premium value
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Occupation- If you are involved in an occupation that will require you to be in a more accident-prone area.
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Hobbies- Any hobbies related to high risk like mountaineering, bungee jumping, river rafting.
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Income- This is an important factor to decide the size of your insurance so it becomes important to disclose your right income so that the right size of insurance can be calculated.
