Why do intelligent parents do stupid things while taking insurance covers?
By Madhurie Singh, July 05, 2012
We were recently in the process of re assessing our insurances and policies.
I lined up all ULIPs to be surrendered and all LIC and other term policies which had anything that said will pay you this much or that much at the end of the term.
And after a solid two months follow and talking and researching, we finally are done with the stage 2 of the process and will start stage 3.
Stage 1 : To assess what will be our term policy amount and why? You can read a lot on Jagoinvestor.com.
Stage 2: Started finding out which term policy to go form. We have finally chosen HDFCLife even though the premium is high, their payment ratio is high.
Stage 3: Surrender the useless policies and ULIPs which were just an eye wash all this long!
Why an eye wash?
Well when we were approached by the agents of HDFClife, BirlaSunlife, ICICIinsurance and LIC, we were stupid.
Stupid as we trusted our agents for our life.
We remained stupid for all the year long as none of these agents ever came back and asked us about the important facts of the life as we grew old.
Cannot blame the agents as they were blinded by their greed, their own ignorance and not really caring for their clients.
Facts that have to be shared with the insurance companies in order to remain in the category of their customers who have signed in the application form that we have not hidden and information from the company.
Now at the time of taking the policy if you were a non smoker and later after a few years you started smoking even as casually as once a month! Yes write once a month, then you have to inform your insurance company about this change.
If you were not consuming alcohol at the time of signng the insurance paper, and now you started under peer pressure or corporate world dark habits, then you must tell your insurance company that you now consume alcohol.
If you were perfectly healthy then and now you have problems as insignificant as BP, dizziness, any fall which led you to hospitalisation then you better inform your insurance company. And in case you have now any other disease like cholestrol, diabetes and respiratory allergic conditions then you better tell them.
There are forms online available on their sites where you have to on your own fill them and send them with all the medical history.
Well while I was researching the insurance companies to take new term plan, I asked all of them several questions.
Only HDFCLife guys answered and so I went with them.
My question to them was, when a claim is made:
Me: Do you guys have a check list which leads to success or failure of the claim?
Ans: The answer was simple. No we do not have any claim check list.
We use your application as the check list.
So if it says non smoker, and we find in the medical history collected by our detectives that you did smoke, then your claim is rejected.
Me: But how will you find out that I smoked? If I am dead and gone?
Ans: Well, we go to all the nearest medical stores, clinics, hospitals and also find out from the medical insurance companies about your details.
Me: SO what if ti was a road accident?
Ans: Well we still check the content of nicotine and alcohol and any medication from the blood report prepared by the doctors and hospital where the treatment was going on. Any trace of nicotine or alcohol or any drug that is prohibited will be used against the claim.
And also it is the onus of the family member to then prove that the person was not smoking, drinking alcohol or not consuming any drug.
Me: Hmm then why is it then we do not get any mail or visit or call from our agents informing us about these reasons of claim rejection?
I understood the unsaid reply . Madam, that is how we reject claims. We teach our agents first to fill wrong details and in the time of claim we reject is as you had signed it saying you are aware of the information being given as correct and not hiding anything from the company.
Me: But why is it LIC claim ration so high?
Ans: Because the claim amount is very low compared to the very high premiums they charge.
Me: So in case we provide every details as per our current medical status and keep providing updates every year, there should be no problem faced by the family in case of mishap.
Ans: Yes and what you write in the form, becomes your legal document and right to the amount.
SO after all the talking you can gather that your claim is in your own hands and the more honestly you answer the application form, the better chances of your claim being serviced. So parents if you really care for you kids and spouse, then do not waste money by paying the premiums every year religiously but not informing the insurance company about the changes in your lifestyle or health. Not every time the premium is rated up or increased.