scorecardresearch5 types of documents you require for a term life policy

5 types of documents you require for a term life policy

Updated: 27 Jul 2022, 11:00 AM IST
TL;DR.

  • To prove your claim to be genuine, you have to submit all the genuine proofs regarding your income & health to the insurance company for them to assess risk & charge suitable premium. An insurance company cannot reject a genuine claim no matter how loss making the claim is.

Customers should choose a life insurance policy depending on the amount of coverage and perks it offers.

Customers should choose a life insurance policy depending on the amount of coverage and perks it offers.

“A contract is only as good as the people signing it.”

― Jeffrey Fry

A term life insurance policy is a contract of trust where the life assured has to disclose everything about his life in terms of income & health and the insurance company undertakes to cover the risk of death in exchange of certain monies received in form of premiums. The risk taken by insurance company is disproportionately high as compared to the amount of premiums they collect. This usually works in the favour of life assured.

Now, we have to keep in mind that, in order to make profits for the insurance company, they have to receive more premiums and settle less claims. This pits them against our interests by not settling the claims. Also when it comes to claim settlement, an insurance company would do all the due diligence in order to ensure the claim is genuine.

To prove your claim to be genuine, you have to submit all the genuine proofs regarding your income & health to the insurance company for them to assess risk & charge suitable premium. An insurance company cannot reject a genuine claim no matter how loss making the claim is.

In this post, we will cover all the documents that one needs to provide in order to get the term life insurance policy. It goes without saying that all the document mentioned below need to be genuine, accurate & true. Keep in mind that at the time of claim settlement, all these documents can be called into question and if found false, can lead to instant claim rejection.

Income proofs: The amount of coverage is based on the human life value of the insured. This is usually depicted as a multiple of yearly income based on the current age. Eg: For age group of 25-30 years the coverage can be 25 times of gross annual salary. You need to submit:

1) Last 3-6 months salary slips.

2) Bank statement for a period of 6-12 months in which the salary is credited.

3) Income tax returns of last 3 years in case you are self-employed.

4) Computation of income certified by a Chartered Accountant (only for self-employed).

5) Any other documents that the company demands to assess your eligibility.

6) Copy of cancelled cheque (in case the policy is not issued, the premium gets refunded to this account)

Identity proofs: All the below mentioned documents needs to be submitted by self-attesting them.

1) Proof of Identity: PAN card or Driving license

2) Proof of Address: Aadhar card, Electricity bill, Rent agreement etc.

Health history proofs: One should disclose all the known pre-existing medical conditions or medical procedures done till the date of taking insurance. Insurance company takes the call by assessing the risk attached to the medical condition either by rejecting the proposal or accepting it with higher premium. Charging higher premium is generally referred to as "Loading". 

You need to submit:

1) Files relating to medical history.

2) Copy of prescription having details of medications recommended by the doctors.

3) Lab reports containing the tests done.

4) Discharge summary report in case of hospitalization.

5) Any other documents that the company demands to assess your eligibility.

Sometimes, if the medical procedure was done in past & the documents pertaining to the procedure are not available then an insurance company might require a declaration from the life assured regarding the summary of medical procedure.

COVID Vaccination Certificate: This has been made mandatory by all insurance company for term life insurance policies. It is compulsory to take both the doses of any vaccine before applying for term insurance policy. One has to disclose the name of vaccine and the dates on which the doses were administered. Certificate of vaccination has to be mandatorily uploaded while submitting the proposal form.

Proposal form: This is the most important document which contains summary of all the disclosures. The proposal form is filed by the insurance agent after receiving all the details from the proposer. After the proposal form is filed, the insurance company asks the proposer to sign and upload the copy of proposal form. They could ask for a physical signature based confirmation or a digital confirmation where one has to click on the link having proposal form and approve it using OTP or email authentication. It is very important as a proposer to check every single detail filed in proposal form because this form is going to be the basis of claim settlement. One must ensure that all the details mentioned in the form are accurate & true. Insurance agents sometimes ignore some minute details in order to get the policy issued quickly. However, it is your duty to check the form with due care before authenticating it for underwriting.

Lastly, 

It is clear that insurance company has a conflict of interest when it comes to settling the claims and they would make sure that only genuine claims are settled. All the documents submitted will be questioned at the time of claim settlement. Also, one won't be around during the claim settlement process & that could leave family in distress due to lack of knowledge. Make sure to submit only genuine documents so that claim settlement process is smooth.

CA Rohit J. Gyanchandani is Managing Director, Nandi Nivesh Private Limited, A Pune based Wealth Management Company.

Follow the entire series on life insurance here

 

 

First Published: 27 Jul 2022, 11:00 AM IST