We often do a lot of mistakes while filling up insurance proposal forms and the same can affect us adversely. Consider a case where someone dies within 1 year of purchasing a life insurance policy and the nominee claims the death benefit. However, the claim gets rejected on the basis that the policyholder did not declare that he had another policy of a higher sum assured from the same insurer and the same agent while signing up for this policy. Hence, even though the policyholder paid all the premiums, the claim got rejected. The insurance Proposal Form is the most important paper that you have to fill out with all your mind.
Such cases are not rare. More often than not, people blame the insurance company saying they are unnecessarily delaying the claim. However, insurance is a business that works on the basis of the ‘Principle of utmost good faith’. It is a common principle that means every person who enters into a contract has a legal obligation towards each other to disclose the material facts which affect the subject of the contract is imperative. The person, therefore, has to provide honest and accurate information to the insurance company. The insurance company on the other hand also has to act in good faith and provide honest and accurate information.
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Common Mistakes While Filling “Insurance Proposal Form”
So, what are the common mistakes that people do?
Non Disclosure of Medical Condition
Many times, people do not disclose their current health condition in the insurance proposal form. However, in the medical history section, the entire medical history should be mentioned. While making the claim, if it is found out that the medical history does not match, the claim might get rejected. It is said that do not hide anything from doctors & the insurance company, there is a clear reason why the insurance company sometimes wants to take the risk and they provide a waiting period or bind a fixed time before covering your disease.
For example, Mr. A had diabetes for a long time. However, in the form, he did not mention the same. However, when he is admitted to the hospital for treatment of heart disease, the fact that he has had diabetes was revealed as a result of which, the entire medical claim go rejected and it feels very bad that you spend money, and when you needed it most, then you could not take advantage of it just because of you not mention during buying the policy.
Not Providing the Accurate Details
While filling up the form, people become casual and fail to provide correct details like height, weight, reasons for the death of family members, etc. Mentioning the correct details is extremely important. If you do not provide the correct height and weight, claims can get rejected in the future because a BMI of above 29 normally attracts a higher premium. Similarly, some diseases are hereditary. If the same is not declared in the proposal form, claims might get rejected in the future.
If we think that hiding our things will benefit us, then we are wrong because human beings make some mistakes in the process of becoming smarter and the insurance company is waiting for you to make such a mistake, and because of your mistake. You may have to bear a huge loss due to this.
Non Disclosure of Other Insurance Policies
It is very important to mention all the policies taken from the same insurer and another insurer, many times your agents might tell you not to. As the total sum assured goes higher, the risk with the insurer also goes higher, and therefore, you might have to go in for medical tests. We would suggest going through the medical tests rather than going for a claim rejection later.
Non Disclosure of Avocation Details
People sometimes do not reveal important facts like whether they are a politically exposed person, or whether they have any hazardous habits like paragliding, parasailing, rock climbing, etc. All these are important to mention since the risk of life increases.
Mention your Occupational Details Accurately in the “Insurance Proposal Form
People often do not mention the nature of the job or service they are involved in. If you are in a profession such as aviation, the risk to your life will be higher and the declaration needs to be done to the insurer. It is very important for the insurance company to know your source of income because they want to know that if you have bought the policy, then you have a way to pay the premium.
Always Keep in Mind – Don’t let your Agent fill up the Proposal Form on your behalf. The proposal form will seek material information regarding you as a life insured and the agent might now know the right details or might fill-up the form as per his intentions to get the policy issued for you by hook or crook (not in all cases). So it is important you fill-up the details on your own to the best of your knowledge.
Additional Reading:- Avoid These Mistakes While Buying A Health Plan!
Other than the above mistakes, it is important to read the proposal form thoroughly, in case you have any apprehensions regarding the understanding of the proposal form. It is important to get it clarified from your insurer. Sometimes, the person filling out the proposal form interprets the question in some other sense which may also lead to nondisclosure or misrepresentation of the important material information. So it is imperative to understand the information asked by the insurer’s incompleteness and furnish the right appropriate details to let the underwriters assess your risk appropriately.
Commonly, people do not read the form carefully and blindly sign, trusting the agent to fill up the most important information. This is something, everyone should avoid at any cost. The agent will not know details about the person to be insured. Hence, it is important to fill up the form carefully. It is better to be safe than sorry at the time of filing a claim.