By Tushar Chatterjee
Life insurance contracts are full of obscure technical terms. Here are some important terms an insured should know.
In most policies, all benefits under a policy cease if at least two full years of premiums are not paid. The forfeiture regulations also state that if insurers are made aware that certain material information has not been disclosed in the application form, the policy may still be voided and no benefits under the policy will be available. This is in accordance with the provision of Section 45 of the Insurance Act 1938.
Article 45 stipulates that no policy may be called into question by insurers after three years from the date of entry into force or the date of reinstatement of the policy. This means that a policy can be called into question within three years from the date of reconstitution if the misrepresentation of the facts made by the policyholder is established. In other words, a claim in the event of death can be repudiated even within three years from the date of reconstitution if the insurer can prove that certain important information was deleted at the time of reconstitution. Some officers advise claimants to file claims after three years to take advantage of Section 45. Here, the claimant should note that if a claim is preferred after three years from death, the claim may be treated as “prescribed.” “.
If the policyholder commits suicide within 12 months from the effective date or renewal date of the policy, the claimant is only entitled to 80% of the premiums paid. Although this is known to most, how many insured know the true meaning of renewal?
People think that when the premium(s) are long overdue and the policy is “settled” by paying all outstanding premiums with interest together with a health statement (and sometimes a medical examination report), the police is said to revive. It is partly true. The policy lapses if the premium is not paid within the grace period. Even if the policyholder shows up one day after the grace days have expired and pays the premium with accrued interest without the insurer insisting on a simple health declaration, the policy is in effect “revived” in the technical sense. Even in this case, if the insured commits suicide within 12 months, the responsibility of the insurer is to pay only 80% of the premiums paid and not the sum insured with the acquired bonuses.
Accident Benefit and Permanent Disability Benefit
These benefits are in the nature of endorsements. The accident benefit clause states that if a serious accident results in the death of the policyholder within 180 days from the date of the accident, the accident benefit (which can be at most the amount of the basic sum insured) is payable to the claimant in addition to the basic amount of the claim. What many do not know is that the policy must be in force on both the date of the accident and the date of death. Thus, it is the duty of the members of the insured’s family to keep the policy in force for six months following the accident. For permanent disability benefit, the policy must be in force on the date the policyholder is declared “permanently disabled” by a government doctor.
Policyholders should read the entire insurance document very carefully and, if in doubt, call the insurance agent or even the offices of the insurers to clarify the points. In the event of future disputes, the court will rely solely on the terms of the policy.
The author is an insurance industry analyst
The fine print
If a policyholder commits suicide within 12 months of policy renewal, the liability of the insurer is to pay only 80% of the premiums paid
For Accident Benefits, the policy must be in force on the date of the accident as well as the date of death