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Ramesh (25 year old individual) applied for a term life insurance plan for a sum assured of Rs. 1 crore. In the application form, Ramesh declared good health and that he wasn’t suffering from any illness. After a couple of days, Ramesh was shocked to know that the life insurance company declined his life insurance application. The life insurance company asked him to undergo a medical test (blood and urine) which revealed that Ramesh was suffering from diabetes. Ramesh, although he was aware of his diabetic condition, did not disclose it in the application form due to fear of the life insurance company charging him a higher premium as compared to standard cases or altogether declining his life insurance application.
In this article we discuss 5 things that you should do / know before applying for a policy so that your policy application is not declined just like the above case of Ramesh.
1) Disclosure of material facts: You should disclose all true facts with regards to your age, health, habits (smoking, drinking etc.), history of family diseases etc. Some people forge their age proof documents to declare their age lower while some people don’t declare their existing illness or smoking habits to avoid higher premium or rejection.
2) Right amount of life insurance: Before applying for life insurance, you should evaluate / assess the right amount of life insurance cover (ideally 10-12 times your annual income) and support it with adequate income proof or premium paying capacity. If an individual with annual income of Rs. 1 lakh applies for a life insurance cover of Rs. 1 crore (100 times annual income), then life insurance company is bound to get suspicious about the intention of taking insurance and reject the application.
3) Keep all documents ready: While applying for life insurance you need to submit photocopies of documents like identity proof, address proof, age proof, income proof and PAN card. You should keep physical / scanned copies all these documents ready before applying for life insurance offline / online. Failure of submission of any of these documents within the stipulated timeframe may lead to rejection of the application.
4) Disclose details of other life insurance policies: This is very important as it will help the life insurance company evaluate whether you are over-insuring yourself.
5) Fill the application form yourself: Finally, make sure you fill the entire life insurance application form yourself and not just sign at places asked by the insurance agent and leave the rest to the insurance agent to fill. Wherever you have doubts, ask for clarification rather than not filling that field in the application form or filling incorrect information which can lead to rejection of the application.
Now that you are aware of the things to know / do while applying for life insurance, you may go ahead and make an application for life insurance. An individual should consider first buying a term life insurance plan. A term life insurance plan secures your family’s future at a nominal cost. Some of the good term insurance plans that you may consider include:
1) Edelweiss Tokio Life – MyLife+ from Edelweiss Tokio Life Insurance Company Limited.
2) LIC online term plan
Now since I have mentioned the names of the plans let me tell you their benefits. Most of the above term plans provide riders as an option, so you can get complete protection. Some people may opt for LIC’s online term plan because LIC is well known since ages. However the new generation is not very conventional and looks for more options.
Edelweiss Tokio Life – MyLife+ is a low cost term plan that provides cover up to the age of 80. A longer cover is an important criterion because in a term plan the family receives the money after the death of the policy holder. So a longer cover will secure your family’s future and you can live a worry-free life. The plan comes with a maximum tenure of 62 years which is higher than many other plans available in the market.
The plan comes with two death benefit options to choose from:
1) Lumpsum benefit option: Here the entire sum assured is paid on the death of the life insured and the plan terminates.
2) Income benefit option: Here, on the death of the life insured, 1% of the sum assured is paid every month for the next 130 months to the family.
The plan also comes with three rider options to choose from:
1) Accidental Total and Permanent Disability Rider
2) Accidental Death Benefit Rider
3) Waiver of Premium Rider
With Edelweiss Tokio Life – Mylife+, a 25 year old individual (non-smoker) can get a life insurance cover of Rs. 1 crore for 25 years at an annual premium of Rs. 4,950 (exclusive of government taxes).
Once you have bought a term insurance plan, you may look at buying other insurance plans for your various needs like child education and marriage planning, retirement planning, wealth creation etc.
To conclude, whichever need you are planning to buy life insurance for, remember to apply the five things that we have discussed in this article so that your application is not declined.