Procedure to be followed for effecting Life Insurance Policy

Procedure to be followed for effecting Life Insurance Policy

Procedure for effecting life insurance policy
Procedure for effecting life insurance policy

The following procedure has to be followed to effect a life insurance policy:

1. Filling up a proposal form

The first stage in taking out a life insurance policy is the filling up of a printed proposal form wherein various details of the prospective insured are sought. This form can be obtained from life insurance companies free of cost. It contains the following details:

(a) Name, nationality, permanent address, occupation, nature of duties, permanent residential address, name of the employer, length of service, father ‘s name.

(b) Table and term of Assurance, sum to be insured, whether premium is payable half-yearly or yearly, amount of premium, place and District of Birth, Date of Birth, proof of age.

(c) Object of insurance, name of nominee, age, relation with insured, full address, height and weight, details of previous policies, if any, history of parents, sisters, brothers, etc.

(d) Hereditary disease like diabetes, insanity, epilepsy, gout, asthma, tuber culosis, cancer, leprosy etc.

(e) When the applicant is a female adult, there is a further series of questions regarding pregnancy, maternity and disturbances indicative of trouble with the female generative organs. Thus the female proposers have to give the following information; educational qualification, average monthly income, source of income, marital status etc.

(f) In the end, the proposer has to make a declaration that the statement given in the proposal are correct and no information is concealed. The proposal is the basis of insurance contract which is submitted to the life insurance company.

2. Medical Examination

After having submitted the proposal form with the insurer, the proposer is required to undergo a medical examination through one of the approved medical doctors regarding his health, height, weight, chest, tongue, eyes, condition of heart, digestive system, nervous system, etc. The medical report is directly submitted to the insurer for consideration.

3. Agent’s Confidential Report

After the medical report, the agent’s confidential report is submitted to the company. It contains details relating to the personal history of the insured. Its purpose is to convince the life insurance company regarding the object of insurance, financial position of the insured and his health conditions.

4. Acceptance of the proposal

After having gone through proposal form, agent’s confidential report and medical report, the insurance company has to decide whether to accept the proposal or not. Proposal is accepted only if it seems favorable to the insurance company.

After acceptance of proposal, the letter of intimation regarding acceptance of proposal along with the first premium notice, is sent to the insured stating the conditions to be fulfilled by the insured in due course.

5. Payment of first premium

On the basis of premium notice, the insured deposits the amount of first premium and the insurer becomes liable from the day on which it is paid. The contract of life insurance becomes complete on the payment of first premium.

Generally, the first premium is paid along with the proposal form. The policy may lapse on account of non-payment of premium within prescribed time frame. The insurance company issues receipt acknowledging the payment of premium.

6. Issue of policy

Having completed all the required formalities, the insurance company prepares the life insurance policy and sends it to the insured.

The back of the policy contains all terms and conditions of the policy along with all the details of proposal, name, address, sum assured, mode of premium payment, etc. The policy bears the seal of the company and the signature of the competent authority.