"Full disclosures" imp for guaranteed risk protection

Within India, from 2.71% insurance penetration back in 2001, the numbers are currently touching close to 4% (percentage of GDP). The intentional efforts to touch more lives through insurance, come with an implicit readiness on the insurers’ part for settling claims. This justifies the very rationale why insurers will also vouch for an instrument to be the Indian populace’s saviour against risks, in the absence of social security.

Life insurance is a contract that gets the insurer and the customer to start off on the foundation of good faith, as part of which companies offer full disclosures comprising critical details about the policy and its terms, as a standard process. Likewise, applicants too are required to be transparent on areas around existing health problems, income, policies previously purchased, occupation etc. Building trust is therefore the starting point of insurers’ approach in bringing more individuals into the insured fold so that life insurance may touch scores of families.

Sometimes, people tend to take shortcuts which don’t necessarily work in the long run. If the idea, for example, is to mend your lifestyle, the right choices made at the beginning is bound to help one reach desired health goal. This could mean following a long-term, consistent routine, and resisting the temptation to follow crash solutions. Investments too show sustained results with a long-term approach. Especially in the context of life insurance, complete disclosures set healthy grounds for smooth “moment of truth” at the claims stage. The fully divulged information mentioned previously helps the insurer assess risks better and offer a suitable protection cover.

Similarly, despite the intentions around offering long-term protection against the unforeseen, there are these rare situations related to non-disclosures, leading to repudiated claims.

Transparent sharing of health status 

Drawing from experience, there are customers inclined to deciding at their ends, information that may be of relevance to insurers, during the application stage. Now some of these may perhaps be seemingly “touch-and-go” medical episodes.

Cases of those in early stages of diabetes or severer conditions including heart conditions, cancer, liver cirrhosis etc. withholding information, is not unheard of.

Proactive submission of documents such as past medical reports, financial documents etc. will help to assess the risk accurately. It also helps to issue policy faster in the customers’ favour.

Non-disclosures at the beginning could spell havoc on the continuity of life that a life assured was hoping to leave as a legacy, when a claim is repudiated because some information was found to be withdrawn. My advice will be to please leave it to the insurer’s underwriter to do the information discarding. Customers keen about securing their loved ones’ future, must be forthcoming about every encounter with the doctor, so those you leave behind have no hassles to face, when the “moment of truth” for an insurer to deliver, arrives.

Being hands-on about documentation

Does wilful signing of blank cheques, because one was asked to do so, not sound absurd? Of course. A cheque, as is life insurance, is just as much of a financial tool.

Besides it being a financial instrument, the very reason one goes for life insurance is one’s concern for family’s sustained economic well-being, in their absence. It’s most favourable, if as a customer, you oversee the information captured in the form, instead of relying fully on the insurance agent. Ensuring accuracy and transparency at this stage will benefit the family with faster pay-outs and eliminates any possibility of claims being turned down.

The rare cases when claim rejections do happen are when there is substantiated evidence of information withheld on material illness. Genuine submissions have no reason for worry.               

Yes, technology has opened doors to possibilities of more enabling, more effective checks and balances. In the absence of social security, the stated intent is to support the larger mission of bringing in more Indians into the risk-protected community. The industry wants to keep its doors open to welcome a larger group into the fold and relies on a sense of mutual utmost good faith and forthcoming disclosures.

This will ensure all are touched with insurance and pay-outs only go to enable the genuine beneficiaries.

(The author is Director – IT & operations, IndiaFirst Life Insurance)