In this blog readers can find and take up knowledge about the various documents used in connection with life insurance, the important of these documents, and the legal implications of these documents.
#Life Insurance Documents Introduction
A life insurance policy is a contract. The stakes in the contract are usually large and those interested in the stakes, many. There could be disputes involving the insurer and the insured or the insurer and the beneficiaries of the policy or between beneficiaries.
The terms and conditions of the policy will provide the grounds to decide the issues in the dispute. These terms will relate to statements and actions at various times during the course of the policy. These will have to be proved through documents. Documentation, therefore, is important in the life insurance business.
The life insurance contract is a long term one, lasting 30 or 40 years. Transactions may be few and far between. If the premiums are paid without any default and no changes in address or nominations, etc. are made, the policy file may not be opened till the claim arises after, may be, thirty years. In the absence of proper documentation, it may not be possible to know the dues and the rights or even the identities of the persons concerned.
#The Life Insurance Proposal Forms
The first document in the insurance file is the proposal or application for insurance. It is usual to obtain the proposal in a standardized, printed form. This is to be completed by the proposer in his handwriting and signed in the presence of a witness.
Contracts, to be deemed valid, require signatures to be authenticated through witnesses. The proposal form and the statements therein are important as these statements form the basis of the life insurance contract.
If someone other than the proposer has filled up the proposal form, the person filling up the proposal form has to declare that he wrote the answers as dictated by the proposer, that the questions were read out to him and that he had understood the answers.
If the proposer has answered the questions in a language different form the questions, there must be a declaration to the effect that the questions were explained to the proposer in his language and the answers were written by him only after understanding the questions fully.
If the proposer is illiterate, the left thumb impression has to be attested by a third party, who has to give a declaration that the questions were explained to him and answers dictated by him were recorded truthfully and were read out to him and were understood by him.
#The Insurance Contract, The Policy Document Insurance Required
These procedures are important to make the proposer responsible for the answers in the proposal, which become the basis of the insurance contract. Otherwise, he may be able to claim at a later date, that he did not know what was written in the proposal, as somebody else had written the answers.
The proposal form contains a declaration at the end stating that all the statements therein are true in every respect and that if any untrue averment be contained therein, the insurer will be entitled to declare the contract as null and void and forfeit the moneys already paid.
The policy document also makes a reference to this declaration. This declaration makes the principle of utmost good faith operational. The agent must draw the attention of the proposer to this declaration and it’s important and ensures that there are no untrue statements in the proposal.
The proposal form will contain information as to the name and address of the proposer name of the person to be insured, if different details of the person to be insured like his occupation and date of birth, details about the insurance required like plan, term and sum assured, riders to be added details about earlier proposals for insurances.
#Earlier Policies, Preferred Mode of Premium, Photograph and Proof of Address
These particulars are looked at by the underwriter. If the address is care of somebody, clarifications may be asked for. There could be a suspicion of moral hazard. The occupation of the life to be assured would determine the need for occupation extras. The manner in which the earlier proposals had been accepted does not bind the underwriter, but provide some guidance. If the earlier policies are not continuing, there could be doubts about the purpose of the present proposal.
Further particulars required along with the proposal, would include preferred mode of premium, whether the policy should be backdated, to get the benefit of a lower age and a lower premium, employment particulars to enable SSS deductions and nomination. If the policy is to be issued under the married women’s property act, then the relevant forms have to be filled up, stating the beneficiaries and the trustees.
These details have no bearing on the underwriting, but are necessary for preparing the policy and for making the necessary administrative arrangements for servicing. Proof of age is usually called for along with the proposal. Since 2006, proposers are required to furnish, along with the proposal, a photograph and proof of address, in terms of the low to prevent money laundering.
#Personal Statement under Life Insurance Documents
The personal statement is to be completed along with the proposal. This asks for particulars about the state of health of the person proposal to be insured, his family history, his personal habits, medical consultations and illnesses, absence from work due to medical grounds, etc.
If the proposal is to be considered as a non medical case, particulars will be required about the employer. If the person is a female, additional questions will have to be answered. All these details are used for under writing purposes. The declaration at the end of the proposal form applies to the statements in the personal statement as well. Incorrect statements can nullify the contract.
If a medical examination is done, either because of the standard rules of the insurer or because the underwriting asks for it. The medical report and any other special reports, become part of the documentation.
#First Premium Receipt
The underwriter’s decision on the proposal may be to accept at OR otherwise. If it is accepted at OR, the policy can be commenced immediately, provided the full premium had been paid along with the proposal. The FPR will be issued. If the acceptance is not at OR, the proposer has to agree to the modified terms and pay balance premium if any, before the FPR can be issued. The IRDA regulations require that the decision on the proposal should.
#Renewal Premium Receipt
When the policyholder pays the premiums due under the policy subsequent to the issue of the FPR, RPRs are issued. These RPRs are important to prove payments, as defaults can lead to termination of the contract. Disputes may arise as to whether a particular payment had been made or not.
If such disputes are raised at the time of the claim, the respective RPRs will provide conclusive evidence. The adjustments of subsequent premiums do not constitute conclusive evidence. This is because insurers do adjust later payments leaving ‘gaps’ for earlier defaults, to be collected at the time of claim.
#The Policy Documents
The policy document is the most important document. It is the evidence of the contact. It is prepared to reflect the terms of the contract. If the original document is lost, it does not affect the insurance contract. A duplicate policy will be issued, on request.
#Endorsements Policy Conditions and Privileges
In a pre-printed policy form, the statement policy conditions and privileges are printed. If any of them need modification, in keeping with the terms of acceptance, endorsements are attached to the policy. If a condition in the pre-printed policy is not applicable, the same will be cancelled by rubber stamping the clause accordingly. If individual policies are printed by computers, such endorsements and cancellations may be avoided.
#Renewal And Bonus Notices
Reminders to policyholders regarding premiums due, are not important documents. They have no significance after the premium is paid. Receipt of the notice is also not essential for payment of premium. Similarly, bonus intimation notices are not important.
#Protection of Policyholders Interests
The IRDA (Protection of Policyholders Interests) Regulations, as amended in October 2002, stipulate that the prospectus or brochure issued by the insure, should exceptions, right for participate in bonus, etc.
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