What to do if you forgot to include important info while buying insurance

Did you miss some relevant information in your insurance application (life/health/accident etc.)? Then this is what you need to do

Published: April 9, 2020 at 10:54 am

Many insurance buyers “forget” to include relevant information in the application form. Sometimes this is accidental, and sometimes this is deliberate (either on their own or on the “advice” of the agent). This violates the insurance contract making the policy and all the premiums paid useless. If you have failed to disclose any relevant information, this is what you need to right away.

About the author: Deepak Mendiratta, managing director of plancover. Deepak has helped many families get medical cover and has also favourably resolved complicated claims. His competence is regularly on display at FB group Asan Ideas for Wealth (AIFW). Regular reader may recall his webinar: How to select a health insurance policy in 2020

Insurance is a contract entered into on Utmost Good Faith. Not including relevant information in the proposal form at the time of taking the cover include – Non-declaration, Mis-declaration or partial declaration – is considered as a breach of the basis of that contract. This has an implication of cancellation of policy and non-payment of claim in future.
Common Reasons for missing on disclosures include 
  1. Intentionally not wanting to declare with consideration of hiding the facts 
  2. Not being aware of what to declare and what not to 
  3. The proposal form is filled by someone else especially an agent
There is a high tendency to buy insurance in case of the presence or suspected presence of an ailment. Insurers often hedge this risk by having a deferred benefit payment – in health, they have a waiting period for the first 30 days and certain treatments for the first year or two. This apart, pre-existing is not covered for a longer duration of time. In life insurance, suicide is not covered for Year 1 
In health insurance, pre-existing conditions and diseases have an important role to play in the issuance of the policy. The practice followed commonly has allowed the insurance companies to not only deny claim payment but also cancel the policy for non-disclosure of material facts. 
In life insurance, non-declaration has far greater implications as compared to non-life products like health. This due to the trigger being death and the stakes being higher in payouts often. While Section 45 of Insurance Act, 1938 deals with time barring on such information being discovered by the insurer post-policy sale, it is advisable for policyholders to note the implications of such a discovery. While most material facts are asked in the proposal form, one may miss declaring accurately or may be advised to declare contrary to facts. 
Once you find that the proposal form may not contain all information accurately, I personally am of the opinion, that you should proactively approach the insurer and update them of the same. 
The options are then with the underwriter to evaluate if the declaration has a material bearing on the risk or not. They may be depending on the nature of declaration, allow the policy to continue, especially if it is a minor impact on the overall risk assessment – viz a severe accident many years earlier that you missed mentioning or an equally severe infection resulting in hospitalization.
In case its an important risk-bearing information viz whether you are a tobacco consumer, the insurer may advise cancellation of the policy and request you to go in for issuance of a new cover. In either case, it is advisable that you f0llow those guidelines given to make sure that in the event of a claim in future, this does not become a roadblock to having the settlement in your favour. 
Do also read the fine print in the policy on informing the insurer in case of a change of habits. If such a clause exists in your policy, do inform the insurer. They may end up putting a premium loading but will not be cancelling the cover. 
In case you suspect yourself of not having disclosed fully, I advise that you come clean now rather than continuing payment premiums which may keep open the risk of non-payment of claims in future.
Do share this article with your friends using the buttons below.

🔥Enjoy massive discounts on our courses and robo-advisory tool! 🔥
Use our Robo-advisory Excel Tool for a start-to-finish financial plan! More than 1000 investors and advisors use this!
New Tool! => Track your mutual funds and stocks investments with this Google Sheet!
  • Follow us on Google News.
  • Do you have a comment about the above article? Reach out to us on Twitter: @freefincal or @pattufreefincal
  • Join our YouTube Community and explore more than 1000 videos!
  • Have a question? Subscribe to our newsletter with this form.
  • Hit 'reply' to any email from us! We do not offer personalized investment advice. We can write a detailed article without mentioning your name if you have a generic question.

Get free money management solutions delivered to your mailbox! Subscribe to get posts via email!

    Explore the site! Search among our 2000+ articles for information and insight!

    About The Author

    Pattabiraman editor freefincalDr M. Pattabiraman(PhD) is the founder, managing editor and primary author of freefincal. He is an associate professor at the Indian Institute of Technology, Madras. He has over nine years of experience publishing news analysis, research and financial product development. Connect with him via Twitter or Linkedin, or YouTube. Pattabiraman has co-authored three print books: (1) You can be rich too with goal-based investing (CNBC TV18) for DIY investors. (2) Gamechanger for young earners. (3) Chinchu Gets a Superpower! for kids. He has also written seven other free e-books on various money management topics. He is a patron and co-founder of “Fee-only India,” an organisation promoting unbiased, commission-free investment advice.
    Our flagship course! Learn to manage your portfolio like a pro to achieve your goals regardless of market conditions! More than 3000 investors and advisors are part of our exclusive community! Get clarity on how to plan for your goals and achieve the necessary corpus no matter what the market condition is!! Watch the first lecture for free!  One-time payment! No recurring fees! Life-long access to videos! Reduce fear, uncertainty and doubt while investing! Learn how to plan for your goals before and after retirement with confidence.
    Our new course!  Increase your income by getting people to pay for your skills! More than 700 salaried employees, entrepreneurs and financial advisors are part of our exclusive community! Learn how to get people to pay for your skills! Whether you are a professional or small business owner who wants more clients via online visibility or a salaried person wanting a side income or passive income, we will show you how to achieve this by showcasing your skills and building a community that trusts you and pays you! (watch 1st lecture for free). One-time payment! No recurring fees! Life-long access to videos!   
    Our new book for kids: “Chinchu gets a superpower!” is now available!
    Both boy and girl version covers of Chinchu gets a superpower
    Both boy and girl version covers of Chinchu gets a superpower.
    Most investor problems can be traced to a lack of informed decision-making. We have all made bad decisions and money mistakes when we started earning and spent years undoing these mistakes. Why should our children go through the same pain? What is this book about? As parents, what would it be if we had to groom one ability in our children that is key not only to money management and investing but to any aspect of life? My answer: Sound Decision Making. So in this book, we meet Chinchu, who is about to turn 10. What he wants for his birthday and how his parents plan for it and teach him several key ideas of decision making and money management is the narrative. What readers say!
    Feedback from a young reader after reading Chinchu gets a Superpower (small version)
    Feedback from a young reader after reading Chinchu gets a Superpower!
    Must-read book even for adults! This is something that every parent should teach their kids right from their young age. The importance of money management and decision making based on their wants and needs. Very nicely written in simple terms. - Arun.
    Buy the book: Chinchu gets a superpower for your child!
    How to profit from content writing: Our new ebook for those interested in getting side income via content writing. It is available at a 50% discount for Rs. 500 only!
    Want to check if the market is overvalued or undervalued? Use our market valuation tool (it will work with any index!), or you buy the new Tactical Buy/Sell timing tool!
    We publish monthly mutual fund screeners and momentum, low volatility stock screeners.
    About freefincal & its content policy Freefincal is a News Media Organization dedicated to providing original analysis, reports, reviews and insights on mutual funds, stocks, investing, retirement and personal finance developments. We do so without conflict of interest and bias. Follow us on Google News. Freefincal serves more than three million readers a year (5 million page views) with articles based only on factual information and detailed analysis by its authors. All statements made will be verified from credible and knowledgeable sources before publication. Freefincal does not publish any paid articles, promotions, PR, satire or opinions without data. All opinions presented will only be inferences backed by verifiable, reproducible evidence/data. Contact information: letters {at} freefincal {dot} com (sponsored posts or paid collaborations will not be entertained)
    Connect with us on social media
    Our publications

    You Can Be Rich Too with Goal-Based Investing

    You can be rich too with goal based investingPublished by CNBC TV18, this book is meant to help you ask the right questions and seek the correct answers, and since it comes with nine online calculators, you can also create custom solutions for your lifestyle! Get it now.
    Gamechanger: Forget Startups, Join Corporate & Still Live the Rich Life You Want Gamechanger: Forget Start-ups, Join Corporate and Still Live the Rich Life you wantThis book is meant for young earners to get their basics right from day one! It will also help you travel to exotic places at a low cost! Get it or gift it to a young earner.

    Your Ultimate Guide to Travel

    Travel-Training-Kit-Cover-new This is an in-depth dive analysis into vacation planning, finding cheap flights, budget accommodation, what to do when travelling, and how travelling slowly is better financially and psychologically with links to the web pages and hand-holding at every step. Get the pdf for Rs 300 (instant download)