Life insurance is the favourite investment option for millions of Indians but very few of them know about their rights as policyholders. A 2011 survey by NCAER shows abysmal level of awareness about policyholder's rights. Whether it's about the time in which a claim must be settled or the 15-day freelook period, the 22,164 households surveyed across India displayed an acutely low level of knowledge.
The good news is that the regulatory changes in the past couple of years have empowered the customer. For instance, the portability of health plans, which became operational in October 2011, has put the fear of god in insurance companies. Here are a few basic rights you should know of.
1 You can cancel the policy within 15 days of receiving the policy
If you are not happy with the insurance policy you have bought, you can cancel it within 15 days and get your entire money back. The insurance company can only deduct the expenses incurred on medical tests, stamp duty and the cover for 15 days.
Unfortunately, not many buyers are able to use this window of opportunity. An alert buyer who goes through the policy document would spot any discrepancy and cancel the plan immediately.
To avoid this, unscrupulous agents deliberately delay the delivery of the policy. However, it has been clarified in several orders that the 15-day freelook period starts from the time that the policy document reaches the buyer.
Agents have lots of dirty tricks up their sleeves. Mumbai-based Hetal Nagda was promised a bonus policy along with her policy. When the policy papers reached her, there was no mention of the bonus plan. She called up the broker, who reassured her that the bonus plan would reach her in two weeks. It never did—this was just a ploy to get past the 15-day freelook period.
2 Insurer must provide detailed information to
the customer
Irda guidelines state that when a policy is sold, the insurance company or its agent must provide all relevant information about the cover to the buyer, so that he can decide whether the plan is in his best interests. If there is something you don't understand or can't find in the document, you have the right to demand that information from your insurer. It is the duty of the insurance agent to explain the policy features and exclusion clauses to the buyer at the time of sale.
3 Insurer must respond, complete procedures within a time frame
An insurance policy is supposed to bring financial relief in times of calamity. If this relief takes too much time to reach the beneficiary, the objective of insurance is defeated. This is why the Irda has laid down specific deadlines for various procedures and processes involving the policyholder and insurance company. Death claims and medical claims have to be settled within 30 days. If the claim is within two years of buying the policy the insurance company is given up to six months to investigate the claim. Of course, the clock starts ticking only after you have submitted the claim form, along with all the required documents. If the form is incomplete or a document is missing, the company won't be held responsible for the delay.
However, here too the insurer has to list out all the documents required at one go and not make the claimant go back and forth. Also, this to be conveyed to him in writing within 15 days of receiving the claim.
Proposal: Must be processed within 15 days. If proposal is cancelled, it must be conveyed to buyer within 15 days.
Service requests: Mistakes or changes required in the policy, or any other nonclaim related service request, should be done within 10 days. Payment of benefits: Surrender value payments, annuity payments and pension processing should be done within 10 days. Maturity sum should be paid within 15 days. Surveyor report: In case of damage, the surveyor should submit his report within 30 days. Claim settlement: All claims should be settled within 30 days of receiving all required documents. Grievances: Must be acknowledged within three days and resolved within 15 days. 4 Insurers cannot refuse to renew medical insurance
The rise in the cost of health care has affected everyone, but senior citizens are the worst hit. But insurance companies are not very keen to give them medical insurance cover because they are riskier than other groups. However, in March 2009, the Irda declared that an insurer cannot refuse to renew a health insurance policy unless there is evidence of fraud, moral hazard or misrepresentation. However, this right to renewability of medical insurance is shackled by the rule that allows insurance companies to hike the premium as per their assessment of the risk.
5 You can change the frequency of premium
at the start of the year
Finding it difficult to pay the huge premium of your insurance policy at one go? Whatever be the reason, you have the right to change the frequency of the premium payment at the beginning of a policy year. All you need to do is write to the insurer 15-20 days before the policy anniversary. You can also alter the nominee of your insurance policy. This is necessary if the policy was bought before marriage. After marriage, ideally, the spouse should be made the nominee.
"15-day period starts after
buyer receives the policy"
Anupam Maiti cancelled the Ulip after he got the policy papers. But Bajaj Allianz argued the freelook period was over. Kochi ombudsman asked the insurer to prove the policy was delivered earlier. It could not do so, Maiti was refunded full premium with 9% interest.
"Features not explained to
buyer at the time of sale."
Dileep Jain took a comprehensive shopkeeper's policy from the National Insurance Company. When rainwater damaged goods in his godown, the insurer said godowns are not covered. Irda ruled that buyer was not guided by agent and slapped a penalty on insurer.
"Insurer shouldn't take over 6 months to settle claim"
Kunti Devi complained that HDFC Standard Life had not settled claim even after 12 months. The company said it was investigating the cause of death. Irda ruled that investigation should not take more than 6 months from the date of claim. Insurer was fined 5 lakh.
"Refusal to renew a policy amounts to unfair practice"
United India Insurance refused to renew Biman Bose and his wife Alka's mediclaim policy. Bose said he was being victimised because of the case he had slapped on the insurer. Supreme Court ruled that the refusal to renew was arbitrary and unfair. Company was fined and asked to reinstate policy.
HOW TO FILE A COMPLAINT 1
Approach the grievance cell of the insurer with the complaint. 2
The company has to acknowledge within three days and resolve it within 15 days. 3
If not satisfied, file complaint with the Irda. You can file it online on the IGMS. 4
You can also approach the ombudsman or a consumer forum. 5
If still not satisfied, you can take the matter to a civil court.
So, try now
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