Your money: No cover till your insurer accepts your policy proposal
By submitting a proposal for an insurance cover, you have made an offer for entering into an insurance contract. The offer is readily accepted in most cases. But in some cases, the insurer may call for a medical examination report and will take a final call after receiving the report.
The question is, what will happen if something happens to the policyholder before the process is concluded? More precisely, what will happen if the customer dies before the process is concluded? Since the process of offer and acceptance is not concluded, the policy conditions are yet to kick in and the customer or her beneficiary is entitled only to a refund of the money paid towards the first premium.
Policy contract
Quite a few cases have been lodged in consumer courts when the insurers refused to pay the amount of sum assured on the ground that the customer had died before the acceptance of the proposal by the insurer. The cases have even reached the national level consumer courts for hearing. In almost all cases, the courts have upheld the decisions of the insurers and the lower courts. The bottom-line is, the courts go strictly by the conditions laid down in policy contracts.
The responsibility of the customers does not end with signing the proposal form. It is important that the proposal reaches the underwriter at the earliest and any further requirements have to be complied at the earliest. These requirements need not be the medical requirements alone. There can be financial requirements as well. The underwriter may call for the copies of last three years’ income tax returns or last month’s salary slip or even the statement of profit & loss account.
High sum assured
The requirements are usually more when the sum assured is high. The
