Lapsed life insurance policy can be reinstated by paying penalty

Published in Mint on Oct 22 2013, Written by Kapil Mehta

If your sum assured is high, the insurer may ask you for a fresh set of medical tests

I was detected with lung cancer about two months ago. My life insurance policy has a critical illness rider? How will this policy operate now?
—R.N. Jha

The base life insurance policy will continue unchanged. You are entitled to claim for the critical illness benefit available in the rider. This will be paid as a lump sum benefit to you. The documents that you need to submit include a completed critical illness claim form, the most recent pathological report and an oncologist’s diagnosis. Some insurers may ask for additional documents or require you to reconfirm the diagnosis from a doctor on their panel.

For a smooth claim settlement, you should understand the three things the insurer will look for in your claim. First, do you really have cancer? The pathological and oncologist report should prove that. Second, was cancer a pre-existing disease? Were you aware of the cancer when you bought the policy? The insurer will carefully read the reports and question you to see if there is any evidence that you were aware of the cancer but had not declared it. Third, were you negligent in not seeking timely medical advice? This can be subjective. In one case the claim of a person suffering from liver cirrhosis was denied because the insurer assumed it was caused by excessive drinking. The claim was finally paid on appeal. In your case, the insurer will look for evidence that the cancer was caused by excessive smoking and that you had been advised to stop. This is an issue only if you smoke.

Submit just the documents that the insurer has specified as its requirements. Don’t add more material unless specifically asked for. Too many documents create the risk of inconsistencies that may require considerable effort to explain.

Due to some unforeseeable circumstances, I haven’t been able to pay my premium for my life cover for about a year. I had paid premiums for five years before that. The policy has lapsed now. Is there any way that I can revive the policy?
—Indranil

You should be able to reinstate the insurance. The insurer will ask you to fill a reinstatement form, a declaration of good health and pay the premiums due perhaps with a penalty. If your sum assured is high, the insurer may also ask you for a fresh set of medical tests.

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