Why a 1 crore term plan can still pay nothing
Term insurance is the cheapest cover per rupee and the easiest to invalidate. Almost always for the same reason.
Term insurance rejections cluster around one cause: something material was not disclosed on the proposal form.
What counts as material
- Diagnosed conditions, ongoing medication, past surgeries
- Tobacco or alcohol use, in the terms the form defines
- Actual income and existing cover with other insurers
- Hazardous occupation or hobbies
- Any earlier proposal that was declined, postponed or rated
The part people get wrong
The form is filled in the name of the proposer, whoever physically typed it. Saying an agent completed it does not shift responsibility. Read every answer before signing.
What protects the family
- Disclose fully, even if it raises the premium. A rated policy that pays beats a cheap policy that does not.
- Keep a copy of the completed proposal form with the policy document.
- Tell the nominee the policy exists, where the document is, and who to contact. A large number of policies are never claimed because nobody knew about them.
- Review the sum assured after a loan, a child, or a large income change.
Insurers in India generally cannot repudiate a life policy on grounds other than fraud after the statutory period from commencement, but that protection is no substitute for honest disclosure on day one.