Sanjay Tiwari, VP-Strategy & Product, HDFC Life says, rejection of a life insurance claim mainly happens due to two reasons. One, is wrong disclosure of health conditions and two, non disclosure of existing health ailments.
So, it is imperative for the person taking life insurance policy to disclose all the medical conditions to the insurance company.
Moreover, for a person around 55 years of age, who is looking for life insurance policy, the best product would be retirement annuity, says Tiwari.
Below is the edited transcript of his interview on CNBC-TV18
Q: What are the most common grounds of when or which life insurance claims are normally rejected. How can this be avoided and what are the most common claims?
A: For any insurance company the moment of truth is the claim settlement. The idea is always to settle the maximum number of claims possible but when one sees the number of rejections which are mainly due to couple of reasons or mistake that the customer commits at the time of taking the policy. First is essentially wrong disclosure of health conditions and second, is possibly no disclosure of health conditions. For example, if one has some kind of cardiac vascular disease or some kind of ailment and if he does not disclose that in the policy then that leads to rejection. Because at the time of claims insurance companies will call for the medical reports, the reason of death and if it is found that the reasons were not even mentioned in the policy then it calls for cancellations. Therefore, almost 95 percent of the rejections arise out of this non disclosure or wrong disclosure.
Q: When companies offer insurance products they make us go through medical check-ups, so can ailments be really hidden beyond a point. If I have a medical history of whatever ailment – is it that I would be completely not served an insurance policy or will I just be asked to pay a higher premium?
A: If one goes through a medical questionnaire and total tests then how is that the condition will not be revealed. There are policies where one is not even supposed to go through medicals but one is certainly asked questions where one has to answer truthfully.
So, if one is answering 5-6 questions like have I taken any kind of medication regarding a health ailment, heart attack or any previous family history of heart attack or diabetes and if one continuously say no, no then I address a claim. That is a non disclosure or a wrong disclosure. If it is a fully medically underwritten policy where one goes through the entire set of medical test then obviously there is a disclosure, which happens in the test results and accordingly appropriate if possible insurance policy is offered. It may not be the original which the customer has asked for but it could be a lower sum assured or some kind of limited benefits for some kind of additional premium that is the reason. But it is not like that if one has some kind of medical condition it will be rejected.
Caller Q: I am about 57 years old – I want to buy life insurance policy with a cover of Rs 15-20 lakh? Can you suggest something for me?
A: At your age without knowing the details of whether you have an existing life insurance policy or not, I would suggest that the primary concern for you should be having some kind of retirement income which life insurance companies do offer through their pension plans.
The offer is that you can take these policies right now and for the next 5-10 years of policy term you can continue paying a certain set of premium pending upon how much income you need post retirement or a post certain age. You can choose your own retirement age as well beyond 55. These polices once they mature they letyou buy an annuity plan. Annuity plan is basically which offers you a monthly income till the time you are alive. So, for your age and for your requirement I would suggest evaluate retirement solutions offered in this market by life insurance companies.