Know all about your rights and duties while buying insurance

Date : 03/12/2019
Read: 7 mins

Insurance is a contract between the insured and the insurance company. Often, policyholders fail to make the most of their insurance plans, as they are unaware about the fine print in the policy document.

Know all about your rights & duties while buying insurance

Tips to ensure you make the most of your life insurance policy. While the insurance company has an obligation to settle your claim (if your claim request meets all the company requirements), you too have some rights and duties as an insured.

Here are some rights you own and duties you need to fulfill as a policyholder.

Rights of a Policyholder

An insurance policy empowers a person with the following rights:

If the terms or conditions of the policy are not in line with what was promised/ perceived at the time of sale,you can cancel or return it within a pre-determined time (generally 15 days) from the date of receipt. On cancellation, you will receive a refund of the premium paid after deduction of costs incurred by the insurer like stamp duty, medicals, etc.
The nominee/assignee of an insurance policy has the right to claim the amount of death benefit of the insured.
Based on the type of policy and the insurance company, you can modify/alter policy terms like mode of payment, tenure, and sum assured, etc.
In case of ULIPs, additional rights are also offered to the insurer
- Make partial withdrawal of funds asper the terms of the policy
- Switch funds based on varyingobjectives and market dynamics
- Surrender the policy after the completion of the lock-in period

Duties of a Policyholder

Let us now understand the duties of a person while buying life insurance. The duties can be sub-divided into three categories as explained below:

Duties before buying a policy

Thorough research must be conducted to determine the need for life insurance and the reason for buying the policy.
The policy tenure, premium amount and frequency must be selected based on your needs and premium paying ability.
One should compare various plans/policies offered by different insurance companies before finalizing the insurance plan.

A very important duty is to fill all the details in the insurance application form correctly. Never sign a blank form or page.

Providing the right nomination detail is imperative.

Duties after buying a policy

Comply with any pending formalities or documentation if asked by the insurance company after proposal submission.

You should receive the policy bond within 15 days from the proposal acceptance. If not, contact the insurance company immediately and take up the matter in writing.

Check the policy document in terms of risk cover, benefits, tenure, nominee, and other conditions. Recheck to confirm whether details in the policy match the explanation provided to you at the time of sale.
In case of mismatch, promptly contact the intermediary or the insurance company for clarification and confirmation.

Policy maintenance duties

Pay premiums regularly and within the grace period. Opt for automatic mode of premium payment like ECS or standing instructions so that you never miss a due date.

Intimate change in personal details, bank details and address to the insurance company at the earliest.

You can change your nominee anytime by filling up a ‘change-of-nominee’ form and getting the same registered in the records of insurance company. In case the nominee is minor, select an appointee by getting him or her to sign the acknowledgment of endorsement as appointee.

It is the responsibility of the policyholder to intimate the insurer if there is any change/deterioration in the health of the insured.

If you lose your insurance policy, intimate the insurance company and get a duplicate document.

Follow all the steps and co-operate with the insurance company or third parties at the time of a claim.