Protect your interests:
The unit-linked platform in the life insurance space has been widely regarded as a fertile ground for mis-selling, prompting the insurance regulator to take steps to limit charges and rein in insurance agents. Though Irda has addressed a whole range of issues in the recent past, the extent of its impact remains to be seen. Policyholders need to be aware of many things, the key clauses include Sections 41 and 45 of the Insurance Act, nomination and assignment of a policy and Irda (protection of policyholders' interests) Regulations, 2002. Some agents try to convince prospective policyholders that all policies come with in-built disability riders or are eligible as collateral for loans, which may not always be the case.
Indisputability Clause:
Section 45 of the Insurance Act bars insurers from raising doubts about the policyholder's declaration after two years from the date of issuing the policy. The section states that a policy cannot be called in question after this period on the ground that a statement made in the application or any report of the medical officer was inaccurate or false.
Free-Look Period:
This is yet another measure to protect policyholders from mis-selling. This clause gives a new policyholder time until 15 days from the date of receipt of the policy document to go through the fine print. During this period, known as the free-look period, a policyholder can surrender the policy if s/he is not satisfied with the terms and conditions. The insurer will have to refund the premium after deducting expenses towards medical tests, stamp duty and proportionate risk premium for the period of cover. "Underwriting is done on the basis of the information provided. You should go through the policy document carefully during the free-look period and supply the insurer with any information that you may have missed, to ensure a hassle-free claim settlement. This is especially important in case of pure-protection term policies, as the claim disbursal will be critical for your dependents in your absence," says Bajaj.
Rider Exclusions:
If you have availed of accident and disability benefit riders and then file a claim arising out of activities like hunting, mountaineering, motor racing or other dangerous hobbies, your claim will not be sanctioned.
So, while going through the pile of documents may be a tedious task, arming yourself with basics will save you a world of trouble.
