Explain certain facts which an insured needs to disclose while taking insurance policy.
Answers
Answer:
The purpose of this regulation is to require insurers to deliver to purchasers of life insurance information that will improve the buyer's ability to select the most appropriate plan of life insurance for the buyer's needs and improve the buyer's understanding of the basic features of the policy that has been purchased
Answer:
Non-disclosure of Facts
Whenever a claim is repudiated or refused by the insurance company, the claimant assumes that the company has not honoured its contract and promise. This issue is faced when the claim arises during early stages of the contract or immediately after revival of the policy. The primary reason why claims are repudiated is nondisclosure of material facts at the time of the contract itself.
To understand this issue, let's look at the legal provision. Insurance contract falls under the category of a special contract i.e, a contract wherein, in addition to the provision of the Contract Act, 1872, some additional conditions will apply for establishing the validity of the contract. The additional conditions include the presence of an insurable interest and the duty of utmost good faith. While entering into an insurance contract, the policyholder or the life to be assured is expected to act with utmost good faith. This places a responsibility on the life to be assured to declare in utmost good faith, all material facts that will affect the risk under the insurance policy. For example, if an individual is suffering from elevated blood sugar and he is purchasing an insurance policy, he is legally bound to declare this fact to the insurer at the time of taking the insurance policy. In case, he purchases a policy without mentioning this fact, he may be granted the cover, however in case of an early death, the insurer is within its rights to repudiate the claim as he did not disclose material facts at the time of entering the contract.
On the face of it, it appears that the insurer is unfair in repudiating the claim on the basis of the non-disclosure. However, the insurer's responsibility is to ensure that non-genuine claims are rejected. Unfortunately the claimant is not in a position to correct the contract and suffers due to the omissions and commissions of the life assured at the time of the contract. To avoid this issue, policyholders should keep in mind that:
>> Insured are bound to disclose all material facts
>> Proposal form should be correctly answered in own hand writing
>> Terms and conditions must be understood thoroughly
All insurers send a copy of the proposal form along with the policy document. The answers given in the proposal form need to be checked and in case of any wrong information, the policyholder should bring the same to the notice of the insurer and get the record corrected.
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