Is Insurance Agent filling your proposal form?

Most of us generally purchase insurance policy through an agent.  The agent serves as a point of contact between the insurance company and us.  Sometimes due to lack of time or knowledge or sometimes due to sheer ignorance or casual approach, we never fill the insurance policy form (known as proposal form) ourselves.  We depend on the agent to fill up the relevant details and sign the proposal form.  Many individuals do not even care to check the correctness of the filled information.  Such casualness or ignorance can at times be costly.

Also read: Should life insurance be taken from the

company charging the lowest premium?

 The curious case of Naval Agarwal

Naval Agarwal had taken a LIC policy for Rs. 2 lakh through an agent in April 2001.  He died in April 2003 and an insurance claim was lodged with LIC by his nominee, Ashish Agarwal.  LIC rejected the claim on the grounds that the insured had withheld material information at the time of purchase of the policy.  The material information in this case was of not disclosing existing insurance policy of Rs. 1 lakh.  In the proposal form, the insured is required to disclosed existing insurance policies, if any.  In this case, the details of existing life insurance policy of Rs 1 lakh purchased in March 2000 was not disclosed.  LIC’s contention was that in case insured had specified details of his earlier policies, LIC would have treated the new policy as ‘high risk insurance’ and would had consider the risk cover accordingly.

Ashish, after unsuccessfully approaching to the Insurance Ombudsman, went to Consumer Dispute Redressal Forum.  Ashish argued that the proposal form was filled in by the agent and his father only signed the proposal form at the places indicated by the agent. Further both the new and the old policies were purchased from the same LIC agent and he should have been aware about the earlier policy details.  Hence it was the mistake of LIC agent to suppress the facts.

The Consumer Forum noted that “it is a general practice in the day to day insurance business that the Agent fills up the lengthy form and the insured signs on the dotted lines as instructed by the Agent. Therefore, there is no doubt in our mind to suppose that the insured has signed on the form as directed by the LIC Agent without any idea that he was supposed to fill up the particulars of the previous policy.”  Forum noted that the agent was LIC’s agent and he should have been aware about the existence of earlier policy and should have filled in the data accurately.  Thus as per their views, there was no deliberate act on the part of the insured of hiding the material details and LIC is liable to pay the claim along with interest and damages.

Important things to keep in mind while filing the proposal form

The above case went in favour of the insured; however, look at the efforts required to claim a sum of Rs 2 lakh.  It took 8 years to receive the amount after unsuccessfully approaching to the company and Insurance Ombudsman.  And all this was due to an error on the part of agent at the time of filling up the proposal form.

Hence it is important to ensure that all details are entered correctly in the proposal form.  Bachhat advices to ensure following things at the time of filling the proposal form:

1. Ensure the form is filled by you.  In case you are not sure about any requirement, take the help of agent but eventually the form should be filled by you.  In an extreme case of agent filling up the form, ensure to read it thoroughly before signing.
2. Never sign a blank form and trust on agent to fill up the details.
3. Ensure that all the facts are stated.  Do not try to hide any facts, howsoever irrelevant they may seem to be.
4. Sometimes agent will tell you to suppress certain facts to reduce the premium amount.  Never do that.  The agent will get the commission for the policy and you will suffer at the time of claim.  This is particularly true for mediclaim policies.
5. In case certain details are not relevant or not applicable, instead of leaving them blank, cross them out or write not applicable against them.
6. In case you come to know about any errors in the form after taking the policy, inform the insurance company of the same immediately.

Above precautions will help in minimizing your troubles and mental agony at the time of claim.

Have you any time experience agent trying to suppress the facts in the proposal form?  Do you fill the form yourself or your agent does it for you?  Do share your views and feedback with Bachhat.