CHAPTER 7
Insurance Documents
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IMPORTANCE OF DOCUMENTATION IN LIFE
INSURANCE CONTRACT
•THE LIFE INSURANCE CONTRACT USUALLY LASTS
FOR 30 OR 40 YEARS.
• TRANSACTIONS MAY BE FEW.
• IF THE PREMIUMS ARE PAID WITHOUT ANY
DEFAULT AND NO CHANGES ARE MADE IN ADDRESS,
NOMINATIONS ETC. THE POLICY FILE MAY NOT BE
OPENED TILL THE CLAIM ARISES.
•IN THE ABSENCE OF PROPER DOCUMENTATION, IT
MAY NOT BE POSSIBLE TO KNOW THE DUES AND
RIGHTS OR EVEN THE IDENTITIES OF THE PERSONS
CONCERNED.
VARIOUS DOCUMENTS INVOLVED:
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PROPOSAL FORM
PROOF OF AGE
PERSONAL STATEMENT
MEDICAL REPORT & OTHER SPECIAL
REPORTS IF NECESSARY
AGENTS CONFIDENTIAL REPORT /
MORAL HAZARD REPORT
FIRST PREMIUM RECEIPT
POLICY DOCUMENT
RENEWAL PREMIUM RECEIPT.
ENDORSEMENTS
RENEWAL AND BONUS NOTICES.
Proposal Form:
• To be completed by the person in his own
handwriting & signed in the presence of a witness.
• If filled up by a person other than proposer, he has
to give a declaration of explaining the contents of
the proposal form.
• If the proposer has answered the questions in a
different language, a declaration has to be given.
• If the proposer is illiterate, left hand impression has
to be attested by a third party who has to give a
declaration.
• In the proposal form, the proposer gives a declaration
that all information furnished by him is true to the best
of his knowledge.
• If later at claim stage, the information is found to be
incorrect, no claim will be payable by the insurer.
• Insurance is based on Utmost Good Faith between
both parties.
• The proposer should give all true & correct
information, whether it is material or not material in
deciding the proposal.
• The insurers should state clearly all the terms and
conditions on which the proposal is to be accepted,.
Proposal Form contains the
following information:
• The name & address of the proposer
• The name of the person to be insured, if different.
• Details of the person to be insured like his
occupation, date of birth etc.
• Details about insurance required like plan, term and
sum assured.
• Riders to be added
• Details about earlier proposals for insurance
• Preferred mode of payment of premium
• Employment particulars
• Nomination
PERSONAL STATEMENT
It contains the following particulars:
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State of health
Personal Habits
Family History
Medical consultations & illnesses
Details about absence from work due to
medical grounds
• Particulars about employer
• Additional details about female proposers
PERSONAL STATEMENT
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• State of health is important to find out whether the life is a
standard or a substandard one.
• Personal habits like smoking, drink etc. affect the longevity of
the life to be assured.
• Family history reveals the physical characteristics which may
be inherited from the parents of the life to be assured. A family
history of tuberculosis, heart disease, insanity, diabetes etc.
requires special consideration.
• If the life to be assured has been suffering from any serious
illness and medical consultations have been taken, additional
medical reports may be called to assess the risk.
• A person who has not been away from work on sick grounds is
normally considered as a first class life.
• If the life to be assured is working for a reputed organisation
who maintain proper leave records, he may be granted cover
on non-medical basis.
As per Insurance Regulatory Development
Authority (IRDA) Regulations, 2002, copy of the
proposal is to be supplied to the policyholder
within 30 days of the completion of the contract.
The medical report and the agents report are
confidential & are useful to the underwriter. The
proposer is not responsible for & is not bound by
the data in those documents.
FIRST PREMIUM RECEIPT (FPR)
• On underwriting if it is found that the life is standard or first
class (not attracting any extra premium) then it is accepted
at Ordinary Rate (OR).
• If not, appropriate extra premium will be charged and/or
terms of acceptance may be modified.
• If proposer does not agree to the revised terms, the
premium is refunded.
• If he accepts, he has to submit the balance premium and
submit the requirements and then the FPR is issued.
• IRDA requires that the insurer takes the decision within 15
days.
• Once FPR is issued, the insurer becomes liable to
pay what is agreed upon.
• The policy document can be issued only after FPR
is issued.
• Sometimes it may so happen that claim arises after
FPR is issued but before policy document is issued.
In such cases, the insurer has to pay the claim since
the contract begins on issuing the FPR.
An FPR contains particulars of the
policy such as :• policy number,
• date of commencement of risk,
• date of maturity,
• date of last payment of premium,
• premium amount,
• mode of payment
• name & address of the life assured
• due date of the next premium due.
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Back-dating of policies is allowed within the
same financial year.
• The premium due dates will be on the basis
of such a back-dated date.
• However, this Date Of Commencement is only
notional as risk cover commences only from
the date of issue of FPR.
•The contract begins with the issue of FPR and
both the parties have to fulfill the obligations.
• Obligation of insurer - to pay claim whenever it
arises.
• Obligation of life assured - to pay the premiums
as & when they fall due.
• However, IRDA has given an option to the
proposer to withdraw from the contract within 15
days of the issue of the policy subject to
deduction of expenses incurred by the insurer
towards placing the policy in his books.
RENEWAL PREMIUM RECEIPT (RPR) :
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After payment of the First Premium,
every year whenever the premium falls
due, the life assured has to pay the
Renewal Premium for which RPR will be
issued.
• Nowadays premium can be paid at any
branch or through internet.
• In Policies under Salary Savings Schemes,
since premium is deducted from the salary,
RPRs are not issued.
• The premium deducted is shown on the
salary slip. So the policyholder is supposed to
check the salary slip whether deductions are
promptly made.
• If deductions could not be done due to
reasons beyond his control like leave without
pay etc, he has to arrange separately for
payment.
POLICY DOCUMENT :
IT IS THE MOST IMPORTANT DOCUMENT
WHICH IS THE PROOF OF CONTRACT.
A POLICY DOCUMENT CONTAINS:
• HEADING
• PREAMBLE CLAUSE
• OPERATIVE CLAUSE
• PROVISO
• SCHEDULE
• ATTESTATION AND
• PRIVILEGES AND CONDITIONS
HEADING:
The top of the front page contains the name and other
particulars of the insurer.
It thus enables to know at the first sight as to which
insurer has issued the policy.
PREAMBLE:
It makes the proposal and the declaration as the basis
of the contract. Hence the information furnished by the
proposer must be strictly and literally true and correct.
It also certifies that the First Premium has been received
at the terms stated in the schedule.
OPERATIVE CLAUSE:
This clause deals with the mutual obligations of
the parties to the contract. The life assured has
the obligation to pay the premiums as and when it
falls due. The insurer has to pay the claim when it
arises as agreed upon in the contract.
PROVISO :
The conditions and privileges printed at the back
of the policy, the schedule of the policy and the
endorsements made thereon are all part of the
policy contract.
SCHEDULE:
It contains the details of the individual policy.
A glance at the schedule only is sufficient to
know about the full particulars of the policy.
ATTESTATION:
The date and signatures of the authorised
official of the insurer are put on the policy. It
confirms and certifies that the insurer has
entered into the contract.
PRIVILEGES AND CONDITIONS:
These are printed at the back of the policy
bond and also become a part of the policy
contract.
ENDORSEMENTS
• IN CASE ANY CHANGES ARE NEEDED TO BE DONE
IN THE POLICY DOCUMENT, ENDORSEMENTS ARE
DONE AND IT IS PASTED TO THE POLICY, KEEPING
IN MIND THE TERMS OF ACCEPTANCE.
• THE ENDORSEMENTS FORM A PART OF THE
POLICY DOCUMENT.
• DURING THE CURRENCY OF THE POLICY,
ALTERATIONS MAY BE EFFECTED IN AGE,
PLAN/TERM, SUM ASSURED, MODE ETC.
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NOMINATIONS CAN BE CHANGED AFTER THE
ISSUE OF POLICY BY
ENDORSEMENTS.ASSIGNMENTS ARE ALSO MADE
AT THE BACK OF THE POLICY AS ENDORSEMENTS.
RENEWAL & BONUS NOTICES
• REMINDERS TO POLICYHOLDERS REGARDING
PREMIUMS DUE, ARE NOT IMPORTANT
DOCUMENTS.
•RECEIPT OF THE NOTICE IS ALSO NOT ESSENTIAL
FOR PAYMENT OF PREMIUM.
•BONUS INTIMATION NOTICES ARE NOT IMPORTANT.
THE BONUS DATA IS UPDDATED IN THE INSURER’S
FILES AUTOMATICALLY. THE POLICYHOLDER WILL
KNOW ABOUT THE BONUS DECLARATIONS
THROUGH NEWS ITEMS AND ADVERTISEMENTS IN
THE MEDIA MUCH EARLIER.
PROSPECTUS
THE IRDA (PROTECTION OF
POLICYHOLDERS INTERESTS)
REGULATIONS,2002 STATES THAT THE
PROSPECTUS ISSUED BY THE INSURER
SHOULD STATE THE SCOPE OF
BENEFITS, CONDITIONS, WARRANTIES,
ENTITLEMENTS, EXCEPTIONS, RIGHT
FOR PARTICIPATION IN BONUS, ETC
UNDER EACH PLAN OF INSURANCE.
THANK YOU
M. J. MALIK
S.B.A.
836 B.O.
AHMEDABAD D.O.
09879094925
lic.malik@gmail.com