"Spending a whole day looking for insurance is fun," said nobody, EVER!
  • Know Your Rights When You Buy Insurance

    The importance of getting insured is something which a majority of people are aware of, these days. As is the norm, when purchasing a life insurance policy, buyers primarily focus on choosing a policy which fulfils their requirements. What many insurance buyers are simply not aware of, are, their rights and privileges before and after having purchased an insurance policy. Insurance is essentially a contract between the insurer and the insured wherein the former will provide life cover to the latter in exchange for regular premiums. Considering this, every policyholder is entitled to certain rights with respect to their insurance policy and claim settlement. Read on to know more about your rights as an insurance policyholder.

    Right To Information - Before Policy Purchase:

    Before you purchase a particular policy from an insurer, you have the right to know all about the policy. Ask to be told about the finer details of the plan like waiting period, grace period for premium payment, free look period within which you can return the policy, what the claim settlement process involved, who can you approach if the insurer is not updating you on the claim status, what are the premiums which you have to pay, what can you do if your claim settlement process has stretched beyond a the specified duration promised by the insurer, the insurer’s claim settlement ratio, etc. If you are committing to pay the premiums towards a policy, it is your right to know all these aspects, which are extremely important.

    Rights When Applying For The Policy:

    If a customer has applied for a policy, the insurance company is required to update them on the status of their application (approval or rejection) within a period of not more than 15 days. Following this, in case the application has been approved, the insurer must ensure that the policy document reaches the policyholder within a duration of 30 days.

    In case the policyholder is taking the services of an insurance agent associated to a company, and they feel that the agent might be unduly pressurizing them into purchasing a specific policy or being vague in providing information about other policies, they can report the same to the concerned authority of the company itself. Also, it is the customer’s right to safeguard their confidential information. As per stated rules, insurance companies may only ask the policyholder for information which is required for approval or rejection of the application, and nothing beyond. It is also the insurer’s responsibility to ensure that the data provided by the policyholder stays confidential and is not shared or leaked.

    Right to Information Regarding The Policy:

    To protect the interests of the policyholders, IRDAI (Insurance Regulatory & Development Authority of India) has laid down guidelines under which an insurance provider is required to communicate all policy related information to a policyholder, without fail. Policyholders are well within the scope of their rights to enquire about all aspects and details of a particular policy, which they may be planning to purchase.

    As per rules, the insurance provider is required to provide the policyholder with a form wherein the latter is supposed to certify whether or not they are aware of the information related to the policy. This is done in accordance with the aforementioned IRDAI guidelines and to ensure that the policyholder knows exactly what the policy is going to provide.

    Rights Regarding Termination of Policy:

    Policyholders have the right to cancel a policy which they think is not suited to fulfil their requirements. If the policyholder wishes to cancel and return a policy, they can do so within a free look period of 15 days. Following successful cancellation of the policy, the insurer is required to refund the premiums which the policyholder may have paid towards the policy. The only charge to be deducted in case of cancellation is surrender charges. More often than not, customers are not aware of this and end up enduring much difficulty as a result. Knowing this is especially important for all those who have decided to purchase an insurance policy via an agent or broker.

    Right Regarding Payment of Premium:

    Making premium payments may not be consistently easy for a policyholder, especially in case of lump sum payments. To provide customers with relief in terms of making premium payments, the IRDAI allows policyholders to change their policy premium payment frequency. Insurers usually allow policyholders to change their premium payment frequency at the policy anniversary.

    Right To File Complaints Against The Insurer:

    Policyholders are well within the scope of their rights to take legal action or file a complaint against an insurer if that latter has allowed any discrepancy in the policy process. Some of the most commonly occurring issues which warrant a complaint are where the insurer may have charged premium in excess to what the policy document states or if they delay in making maturity payments.

    Many policyholders, when faced with such situations, are at a loss to take the necessary action because they are not aware of their rights. Many also consider it an unnecessary hassle and a lost battle to go up against insurance providers who are large conglomerates. However, if one faces a situation similar to this, they must take action and file a complaint, as no insurer would want to have their image tarnished and would do go to lengths to remedy the situation.

    Rights Regarding Death/Maturity Claims:

    The essence of a life insurance policy is to provide life cover to a policyholder by way of settling their claims. For the benefit of the common customer, the IRDAI has laid out a set of instructions to be followed by insurers, especially regarding claim settlements. If an insurer has received a death claim on a policy, they must inform the claimant within a period of 15 days about the documents which require to be submitted for claim processing. In case the claim requires additional investigation, the same must be completed by the insurer within a period of 180 days. If no additional investigation is required to process the claim, then the same must be settled by the insurer in not more than 30 days from the date when all claim supporting documents have been received.

    In case of a delay in the settlement of the claim, the insurer is required to pay a penal interest amount, over the amount of the claim. For maturity claims, the insurer must inform the claimant a minimum of 2 months in advance about the date on which the maturity claim is due. The payment on the policy must be made within a period of 30 days, starting from the date on which all necessary documents have been received by the insurer.

    When it comes to insurance policies, customers often feel apprehensive of voicing their issues or complaints given the widespread belief that it is impossible to have complaints and issues resolved by an insurance company. However, this is not so. If you have a watertight case regarding your claim or complaint, you can confidently file a complaint, which will be looked into the by IRDAI itself.

    Given the vast variety of insurance policies that are available in the market, it can often become challenging to choose one which is best suited to one’s requirements. Before purchasing insurance, it is important for one to have adequate knowledge and proper understanding of how their chosen plan works and can provide benefits. As a customer, it is your right to find out everything, be it the good, the bad, or the ugly of a policy, to know exactly what to expect from it. After all, you are investing your hard earned money in it, you have every right to know every last detail so you can get the maximum benefit from your policy.

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