LIFE INSURANCE CORPORATION OF INDIA PRESENTATION BY DR.H.C.JAIN EXE.DIRECTOR (AUDIT)

Contents 1. LIFE INSURANCE CONTRACT 2. UNDERWRITING FACTORS 3. TYPES OF UNDERWRITING 4. POLICY TERMS AND CONDITIONS 5. CLAIM PAYMENTS 6. RELAXATIONS 7. REASONS FOR NON-PAYMENT 8. STATISTICS

LIFE INSURANCE CONTRACT Life Insurance is replacement of earning capacity. Insurance is a contract between proponent and insurer where insurer depends upon the details given by the proponent. Therefore, it is a contract of utmost good faith. Insurance on the life of another person (unrelated) person cannot be granted.Even in case of relations there are some requirements.

UNDERWRITING FACTORS Income, health, insurance needs, kind of occupation, etc of the proponent. Insurance depends upon kind of plan, risk involved, age, health, duration of the policy, financial position, occupation, life style, etc.

TYPES OF UNDERWRITING For convenience of the larger population, insurance is granted without medical check up also. If there is a medical, some special reports may also be required. Based on the reports, life may be treated as standard or sub-standard and in some cases risk may even be denied. Certain plans have restrictions on entry age, sum assured and duration of policy.

POLICY TERMS AND CONDITIONS Some of the major terms and conditions are : -- Correct age -- Continuation of the policy till the contingency -- Deferment period -- Accident and Disability clauses.

CLAIM PAYMENTS It is a medico actuarial research which divides claims into two categories, i.e., within 2 years and after 3 years. Insurance Act also permits investigations in case of death claim within 2 years. As insurance is accepted based on the details provided by the proponent, if death takes place, the cause of death, duration of death, etc are looked into. Normally, if death occurs after 3 years, claim is paid without any investigation.

RELAXATIONS In some of the cases even if claim is not falling under payable category, claim is paid by Insurer (LIC) depending upon various factors. In case of natural calamities viz., flood, earthquake, etc. some of the requirements are waived by LIC of INDIA.

REASONS FOR NON-PAYMENT If death occurs within one year due to suicide, claim is not paid. Accident should take place in public like road accident, drowning in a river, etc. Sometimes the tendency is to show death at residence by burning or consuming poison, etc as accident. Claim not paid under unconcluded contract where death occurs before fulfillment of the requirements. Claim not paid for reasons viz., unclear legal title, wrong disclosure of health, income, age, earlier policy details, impersonation.

Contd…. The claimants plea that LIC’s Medical Examiner has examined the party and hence he is supposed to know the party’s illness, is not tenable. Some of the illnesses, if not disclosed by the party cannot be found out by the doctors since certain diseases can be controlled by taking medicines. Non-payment of premium to office. (But claimed to be paid to a representative like an employee or agent is not acceptable) Information was communicated to the agent but he had not written in the proposal form.

Contd…. Sometimes proposals are submitted at different places or away from residence. This creates doubts about the genuineness of the individual. Nominee should be close relative and not a stranger. Accident claim may be denied if it has occurred due to breach of law or in a private place and authentic evidences are not provided to prove it. Disability claim is withheld if it does not fall within the policy terms and conditions. Female life insurance in certain categories is subject to the insurance of the husband if she is not having income.

STATISTICS Claims Review Committees:- At Zonal Office and Central Office one of the members is from judiciary Approx. 4 lakh claims received per year of which repudiation is between 9000 – 10,000 only. Appeals received in 1/3 rd of the cases. In 20% of the cases, claim is paid on ex-gratia basis and in balance cases repudiation is confirmed. Ombudsmen : Out of 5000 cases, Ombudsman decisions are as follows : Withdrawal/settlement Dismissed Repudiation confirmed Awards in favour of claimant * Cases which come to Ombudsmen are not only death claims but relating to other service matters also.