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How Can an Accurate Insurance Proposal Form Secure You?

Jul 02, 2018 | 2 years ago | Read Time: 3 minutes | By iKnowledge Team

An insurance policy secures the financial future of your loved ones. When you invest in an insurance policy, you are required to complete all formalities, accurately. An important document that is critical to the policy is the insurance proposal form. An inaccurate proposal form is one of the most common reasons for claim rejection. According to a study conducted by the Insurance Regulatory Development Authority (IRDA), of the 7.62-lakh life insurance claims filed in 2009-10, insurers rejected nearly 15,000 proposals. Let’s take a closer look at the insurance proposal form and areas that need your attention.  

A proposal form is a document that contains relevant information about the proposer and the life insured. There are certain aspects you need to be honest about with the insurance company, as it could affect your claim and premium amount. These include:

  • Personal details – Giving your personal details to the insurance provider is crucial. This section includes your full name, contact number, address and occupation. Although these are basic details, mistakes that occur in these fields could cause a rejection. Often, insurers are unable to contact the policyholder due to incorrect details. Hence, their policy documents remain undelivered. Moreover, crores of claims and maturity amounts remain unclaimed, as insurance companies are unable to reach the policyholders. Ensure personal details are filled correctly to receive timely updates from the insurer.
  • Medical history – In some cases, you may be hesitant on providing medical information to the insurer. However, it is of utmost importance that you provide complete and correct information about your medical history. These details are directly connected to your insurance policy and claim amount. Further, it determines the premium amount of the policy. For instance, if an individual whose Body Mass Index (BMI) is above the normal measure, the premiums, and terms and conditions would be set accordingly. Providing incorrect medical conditions could lead to negation of one’s medical claim.
  • Family history – Family history determines the possibilities of any medical condition that a policyholder may inherit. In most cases, insurance companies seek meticulous details on genetic or hereditary conditions before proceeding. However, if an individual inherits a hereditary condition after the policy has been taken, the policy will insure the policyholder for the same.
  • Other policies – Details regarding previous or current related policies should be mentioned. One valid reason for this is, at the time of claim, multiple policies would have to pay the amount proportionately.  Another critical reason for this is to evaluate the moral hazard of the proposer. A number of policies may appear as suspicious and the insurer may want to know the specifics for more than one policy. Details on similar insurance policies could authorise the insurer to enquire with other insurers on the proposer.
  • Income – The insurance company needs specific income details to determine if the premiums will be paid on time. 
  • Lifestyle – Specific habits such as smoking must be shared with the insurance provider. Revealing a smoking habit is vital in pure risk products such as term plans. For instance, term plans have low premium rates but in the event the proposer discloses a smoking habit, the insurer may provide different premium categorisations. While the underwriting criteria may vary from one insurance company to another, most insurance companies levy higher premiums on smokers.

To sum up

An insurance company does not unnecessarily reject a claim. However, they have the right to reject any claim that provides inaccurate and incorrect information. By stating accurate information and facts in the insurance proposal form, you ensure an approved policy and most importantly, an easy and burden-less experience for your loved ones, should the circumstances emerge wherein they have to make a claim. At the end of the day, the very purpose of purchasing a life insurance policy is to financially safeguard your loved ones.

Advt. no.: IA/Jun 2018/4145

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