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Know Your Rights before Buying an Insurance Plan

We do a lot of research online before buying an insurance product. The focus is completely on the choosing the right policy, so that it fulfils the desired requirement. Generally, the insurance buyers miss to check out their rights and privileges before and after buying an insurance plan. An insurance policy is a legal contract between the buyer and seller, where the seller will provide the life cover and buyer will pay a regular premium for the same. Considering this, every purchaser of the insurance policy is entitled to certain rights with regards to insurance policy and settlement of the claim. In this article, we will talk about the rights attached to buying an insurance plan.

Right to Information

This is one of the most basic rights of the buyer.  Before the purchase of a particular insurance policy, a buyer has the right to know all the information about the policy. Important terms and conditions like free look period, grace period for paying the premium, waiting period, surrender value, claim process, inclusions, and exclusions etc. All these details are extremely important and the insurer has to make all this information easily available for the buyer to view the same.

Rights when enrolling in the Policy:

If a customer has enrolled in a particular insurance plan, it is the duty of the seller to keep him updated on the status of the application. If the application has been approved or rejected, the same needs to be informed to the customer within a period 15 days of the enrolment. Once the application has been approved, the policy document needs to be handed to the customer within a period of 30 days. If the policy is being purchased through an authorised insurance agent and the buyer feels he or she is being pressurised in buying the policy without giving proper information, it can be reported to the insurance company to take appropriate action.

Confidentiality of the personal information

It is the responsibility of the insurance company or seller to safeguard all personal information that is supplied by the buyer to enrol in the policy. At no point during or after the tenure of the policy, the personal information of the buyer can be shared or leaked. In case the policy application is not successful, it is the duty of the insurance provider to purge the confidential information of the buyer in a safe and secure manner.

Rights Regarding Termination of Policy:

Policyholders have the right to terminate the policy within a stipulated period, normally 15 days, if they think the policy is not right for them. Following the cancellation of the policy, it is the duty of the seller to refund the premiums paid as per the terms and conditions laid down at the time of application of the policy. Only charges that can be deducted will be medical or cancellation charges. Many policyholders are not aware of these charges and may end up having difficulty and hassle over it. This is usually the case when polices are purchased through an agent who gives false promises of a full refund on cancellation of the policy during free look period.

Right Regarding Payment of Premium:

Due to change in circumstances, it may not be always easy for the buyer to pay the policy premium, especially in lump sum payments. To ensure that customers do not get this hassle, IRDAI allows a change in the payment frequency for the benefit of the policy holders. Insures generally allow to change the policy period during the anniversary of the policy term.

Right to File Complaints against the Insurer:

Policyholders have the right to take legal action against the life insurance company if the latter have deviated from the actual policy process. Most of the common complaints are that insurers have charged an extra premium over and above what was stated at the time of the inception of the policy, or if the payment on maturity has been delayed.

Many policy holders are confused about what action to take to tackle such situations as they are not aware of their rights. However, IRDAI has protected the rights of the insured and has set up a grievance platform to ensure the rights of the buyer are not violated at any time during the tenure of the policy or at maturity of the policy.

Rights Regarding Death/Maturity Claims:

The whole purpose of buying the life insurance policy is to ensure the policy comes to the rescue for loved ones, if there is the unexpected death of the policyholder. For the benefit of the customers, the IRDAI has laid down certain rules to be followed by the issuer during the claim process. When the insurer receives the claim process, the insurer needs to inform the nominee all the necessary documents that are required to pass the claim within the period of 15 days. The death claims need to be processed within a period of 30 days after the receiving the last necessary document. If the case requires additional investigation, it should not take more than 180 days to come to a conclusion.

If there is a delay in the claim settlement, then the insurer needs to pay penal interest amount to the claimant. In case of maturity cases of the policy, it is the duty of the insurer to inform about the maturity case two months in advance when the maturity claim is due. The maturity amount needs to be disbursed within 30 days on receipt of all necessary documents by the insurer.

Conclusion

Many customers do not voice their compliant as they are not aware of their rights. Also, it might be the case that they are not aware of the grievance process or simply feel intimidated to fight against a corporate giant. If there is enough evidence of the discrepancy in service, then the customer should lodge the complaint with the insurance company or escalate it to IRDAI.

Today, there are many different types of life insurance policies available in the market. It can be confusing to choose the right one easily. Before enrolling for the policy, the customer should educate themselves of the rights they possess when purchasing a particular insurance policy. As a customer, it is your right to know the product properly before entering into a contract with the insurance company. Any doubts regarding the policy should be properly cleared as it is your hard earned money that you are investing in the insurance policy.

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Written by Rishi Agarwal

Content AuthorYears Of Membership

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