Procedure to effect life policy and foreclosure

1. Application in a proposal form Application in the prescribed proposal form – which contains all relevant information to process the life insurance.

True and fair information in the proposal form – Any misstatement will lead to make the contract voidable – applicant must not conceal any information.

1. Application in a proposal form

Name & Address of the proposer Name & Address of the insured, if different

Details of nomination Employment details Riders, SA, DoB Mode of premium payment

2. Personal Statement A personal statement is also required along with the proposal form.

Details of health statement Personal habits Life History Medical consultations and illness

3. Proof of Age A proof of age is also required along with the proposal form.

Copy of School Certificate Certified copy of an entry in the birth register maintained by the government

4. Special Reports Medical Report a) Medical report is a confidential report.

Insurance is given to a person of sound health and sound mind. Therefore, insurers insist for a medical examination of the proposer.

b)Proficient and qualified allopathic doctorc)Past present health conditions are

examinedd)At the end of the report the examiner

will give his final opinion

4. Special Reports Agents Confidential Report – Agent is

the link between insured and the insurance company

a)He can be remarked as the first underwriter

b)ACR is the property of the insurer and it is confidential

c)The agent must verify the correctness of the details before the giving the report

4. Special Reports Moral Hazard Report – It is prepared

by the an officer of the insurera)It contains the details of moral hazards

associated with the insuredb)Moral hazard means the risk to the

insurer due to the dishonesty of the insured

c)MHR must be observed if it is suspected that the proposer is likely to be dishonest or the proposer intends to make profit out of the policy.

6. Acceptance of Proposal After underwriting, the company

makes a decision to accept or reject the proposal.

IRDA Regulations- decision on the proposal in 15 days from the proposal

Proposal is accepted if the conditions are favourable to the insurer

Then an acceptance letter is sent to the insured

7. First Premium Receipt (FPR)

FPR is the evidence that the contract has begun

It is issued by the insurer after receiving the first premium from the insured

This is the effective date on which the liability of the insurer commences.

8. Issue of the Policy (Policy Document)

On the payment of first premium, the contract of insurance comes into existence.

Most important document in the insurance contract

Document is to be stamped in accordance with the Indian Stamp Act, 1899

8. Issue of the Policy (Policy Document)

Recital Clause/ Preamble – Opening section- recites the parties to the contract- proposal and declaration signed by the party

Operative Clause – Circumstances in which insurers agree to make payment or its equivalent to the insured (Mutual Obligations)

8. Issue of the Policy (Policy Document)

Attestation Clause – Signature of the policy and its wordings

Conditions SchedulesSA, Mode of premium payment, riders, exclusions, special clauses

9. Other Insurance Documentsa) Cover Note– Cover note is issued in advance of the policy.

It is issued when the policy cannot be issued straight away

When negotiation are in progressIts necessary to provide cover on a provisional basis

9. Other Insurance Documentsb) Endorsements– Policies are issued in a standard format covering certain perils and excluding certain others. If it is intended to modify the terms and conditions of the policy, its done by setting out the alteration in a memorandum.

Its attached to the policy and forms part of it. This memorandum is called endorsements.

9. Other Insurance Documentsb) Prospectus– Brochure issued by the prospective buyers of insurance

Scope of benefits, conditions, warranties, bonus etc.

What are guaranteed / what are not guaranteed.

As the name says, it is the closure or writing off the policy before its maturity.