Buying a life insurance product may not be a simple exercise anymore.
In a few months time, there is likely to be a stringent due-diligence process in place, with multiple layers of screening to check your track record. You may even have to go through a health check-up much like when you buy a health insurance product, or what's more, your premium may also go up.
Reason? Most have missed the finepint in the Insurance Amendment Act, which underlines that no insurer would be allowed to decline a claim on a policy under any circumstance, which is three years old - even if it is a fraud.
"A policy of life insurance cannot be called in question on any ground whatsoever after the expiry of three years from the date of issuance of the policy; the date of commencement of risk; or from the date of revival of the policy," according to the Act.
While insurance companies are yet to figure out the exact impact of this clause, most companies said they were looking into the issue, and buying a life insurance product is likely to become "a little" difficult unlike the past. A rise in premium was also likely, they added .
"Customers buying life insurance products in the coming months may have to go through a thorough screening process," RM Vishakha, MD and CEO, IndiaFirst Life Insurance, told HT.
By 2020, India's insurable population is set to touch 7.5 million and the average life expectancy will be 74 years. Besides, it is also a preferred savings instrument for many. According to estimates, life insurance is set to account for 35% of total savings by the end of this decade. In 2009-10, it was 26%.
Customers from certain pockets which have had higher instances of frauds may find it "very difficult to buy a life insurance product," said Yateesh Srivastava, industry analyst and former chief operating officer, Aegon Religare Life Insurance.
"There could be a health check up too before a life insurance product is finally sold," he added.
"Payment of non-genuine claims may also result in increase in premiums of life Insurance policies." said V Viswanand, senior director and chief operations officer, Max Life Insurance.