Why you should always be honest with your insurer

A key aspect of buying an insurance cover is the expectation to receive funds in case of need. Talk about any type of personal insurance: home, health, motor, or life, we expect the insurance company to have our back. But in many a case, claims have been disputed or even rejected. The repercussions can be life altering in case of a life insurance particularly.

The most common reason for rejection of claims is non-disclosure of information. “Some mistakes just have greater consequences,” says Neeraj Gupta, CEO, Policybazaar UAE.

“Insurance contracts are based on the declaration of utmost good faith. Insurance companies expect their customers to disclose accurate health conditions at the time of purchase of the policy and even during the period or term of association with the insurer,” says Gupta, adding, that even if one incurs an illness after buying the policy, he or she must update the insurer about it.

Keeping the insurer informed of any changes to the body and lifestyle secures the policy and assures the policyholder that even if he or she were to die because of the condition disclosed, beneficiaries will not face any issues in claiming the benefits of the policy.

Explains Gupta: “If you develop any health condition after five years of the policy make it a point to let your insurer know about this. Insurance companies investigate before disbursing claims. Withholding information or not updating the insurer of developing or new health conditions can lead to rejection of claims.”

Gupta offers the below-mentioned points to keep in mind when buying a life insurance policy:

1. Importance of correct information: While purchasing a term life insurance policy, do not hide personal details like your age, income, profession, habits (smoking/drinking), etc. Ensure transparency between you and your insurer by accurately filling the disclosure form when buying a policy or making a claim. Withholding information or falsifying can lead to claim rejection.

2. Read the policy document carefully: The devil is always in the detail. Make it a thumb rule to read the terms and conditions of the insurance policy carefully. Relying on the glib spiel of insurance agents isn’t always the best advice you’ll get. Do not glance through, read the essential paperwork. Take a couple of days or more, if you have to, but read.

3. Medical history: Health condition influences the premium of a life term insurance. You might save a few pennies initially in premium by not disclosing accurate health data, but it could prepare ground for the insurance companies to deny your claim when in need. It is mandatory to disclose existing medical condition, operations or surgeries undergone, if any, etc. It is also advisable to disclose health details of family members or any other hereditary conditions to avoid rejections of term insurance claims.

4. Information about the nominee: While buying a term life insurance, update information of the nominee in the application form. Also, choose your nominee wisely. They may include your parents, spouse, or children. In case the nominee is a minor, you would also need to list a guardian.

5. Insurance premiums: Pay premiums regularly to avoid disruption or lapse of a policy. Also, it is important to know that claims are settled only for active term insurance policies. It is therefore advisable to set up a direct debit facility to ensure timely payments.

6. Additional insurance policies: Insurance companies ask if you have any other life policy, term life or others. Do not hide information assuming the total sum insured for one of the policies will be reduced. Not disclosing information about additional policies can increase the probability of claim rejection which can land your loved ones into trouble.

suneeti@khaleejtimes.com

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