The initial three years in a life insurance contract between the life insurance company and the policyholder is an important milestone. Show While the rules allow insurers to repudiate (or reject) death claims within the initial three years of a life insurance policy on the ground of misrepresentation or suppression of a material fact, their hands are tied for repudiation of claims, if a death happens after this period. However, it is important for a policyholder not to take shelter under this 3-year clause as it might be a lengthy claim settlement process for the surviving family members if the case drags into the courts. Providing
information At the time of applying for insurance, based on the information provided, the underwriters of the insurance companies see whether the individual buyer can be provided any coverage or not. In the absence of any such factual information, unhealthy lives may be covered posing a danger to the entire group of lives insured and may even violate contractual obligations. Importance of initial three years of a policy "The way the amended section 45 is worded today is that no life insurance policy can be called in question for any reason whatsoever after a period of 3 years from the date of commencement of risk or reinstatement or addition of rider. Therefore, a strict interpretation of the section would mean that even if there was a wilful non-disclosure, the right of denial of death claim is not available after the said period of 3 years," explains C.L. Baradhwaj, executive vice-president, legal and compliance and company secretary, Future Generali India Life Insurance. However, regardless of whether a claim has arisen or not and when it is intimated, once this period of 3 years is over, the policy cannot be called in question. The insurers are allowed to call in question a policy only within 3 years even if there is no death claim. Repudiation within 3 years However, if a fraud is established by the insurer before the end of three years, even the premium is forfeited. "Suppression of material facts or misstatements on the grounds of fraud are covered under section 45(2) - where fraud is established, the claim can be denied and premiums paid can be forfeited," informs Baradhwaj. Fraud detected
after 3 years Establishment
of a fraudulent contract What you should do Make sure you have not just read the terms and conditions of the policy but also have filled up the application form yourself. "Once you sign the proposal form, you are deemed to have read all the questions and answers filled therein. This is the presumption in law. You cannot take a defence saying that I did not read the proposal form when I signed it," says Baradhwaj. It is always better to disclose all medical history including family history and even pay 'loaded' premium, if any, than to leave the surviving family members at bay in case of a claim. (Your legal guide on estate planning, inheritance, will and more.) Download The Economic Times News App to get Daily Market Updates & Live Business News. What happens to the death benefit of a life insurance policy if the insured?The insurer must pay the death benefit when the insured dies if the policyholder pays the premiums as required, and premiums are determined in part by how likely it is that the insurer will have to pay the policy's death benefit based on the insured's life expectancy.
What will the beneficiary receive if the insured dies during grace period?Most policies have a 31-day grace period after your premium's due date. You can make a late payment without being charged interest and still be covered. If you die during the grace period, your beneficiary gets the death benefit minus the past due premium.
What happens if the policyholder dies before the insured?If the owner dies before the insured, the policy remains in force (because the life insured is still alive). If the policy had a contingent owner designation, the contingent owner becomes the new policy owner.
What happens when you are the beneficiary of a life insurance policy?The primary beneficiary gets the death benefits if he or she can be found after your death. Contingent beneficiaries get the death benefits if the primary beneficiary can't be found. If no primary or contingent beneficiaries can be found, the death benefit will be paid to your estate.
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