How to study Fine Print before buying an Insurance Plan in India?
You might be taking a life insurance plan or health insurance plan or car insurance for your or your family. However, there are several terms and conditions which are written in the Insurance Plan. This is termed as Fine Print in Insurance Plan. Many of us would just go through the high level summary written in brochure or hear from the agent and take the insurance plan. However, fine print in the insurance plan is key as you are signing this document. What is this Fine Print in Insurance Plan? Which are insurance plan you would see this fine Print? How to study Fine Print before buying an Insurance Plan in India?
What is an Insurance Plan?
You are already aware what Insurance Plan is, if not read this section.
Insurance is basically a contract between the insurer and the insured about the protection from financial losses. It is like dispersal of risk for some contingent and uncertain losses. There are many types of insurances like life insurance, health insurance, motor insurance (car + two wheeler), home insurance, travel insurance etc. In all the insurances, the insured receives a contract paper from the insurer which contains all the terms and conditions of the contract. This is a very vital document and has to be read thoroughly because along with normal print, it also contains some fine print text.
What is meant by ‘fine print’ in Insurance Plan?
Fine print, also known as ‘mouse print’ is smaller than usual print and less noticeable which partially describes a commercial product or service. It generally contains the terms and conditions which has a considerable impact on the policy while making claims for the insurance. It is often deceiving in nature and given in such a manner that majority of the consumers ignore to read it.
What are the various insurance plans where it would be applicable?
The concept of studying fine prints is applicable to almost all forms of insurance.
1) In health insurance, one needs to look to the clauses like cashless hospitalization, pre and post hospitalization, maternity benefits, ambulance charges, waiting period, pre-existing coverage etc.
2) In life insurance policies, there are many exclusions which are not covered by the policy. Like a death in suicide case is not covered.
3) Likewise, Insurance companies project the benefits of a critical illness policy, but there are so many hidden terms and conditions attached to the policy that many a times the claims are not paid by the company. The sum assured s not paid if death occurs due to–
a) Consumption of alcohol or drugs
b) In bthe event of war
c) While taking part in any racing activity or hazardous activity or activity which is criminal in nature
d) In case to death owing to pre-existing illness
4) In car insurance, many insurance companies do not provide claim if the car is driven by any person other than the members of the house. They even control the claim to be paid at the time of payment by adding the phrase, ‘as defined by us’.
5) Home insurance is not very common in India due to lack of awareness. There are different degrees of risks that are covered under home insurance. Every policy differs in words and these words can catch you in trap if not understood in their true sense. Some policies cover the act of God and perils such as earthquake and some does not.
6) Wedding Insurance is slowly growing in India with the awareness being created about risk coverage for the high wedding expenses being incurred. There are several terms and conditions which are undelying and unless you read them, you may not know what you are really opting for it. Sometimes, you may take back your decision based on the fineprint.
How to study Fine Print before buying an Insurance Plan in India
Before taking any type of insurance policy, it is most important to read the entire document carefully and precisely. The fine print of insurance will enable you to understand the scope of the policy and its limitations which are hardly spelled out by the agents.
1) This is a common phenomenon while buying health insurance plans. For example – Mr. X took a health insurance policy. After five months, he got himself operated for cataract but his insurance provider refused the claim because as per the insurance contract, cataract was covered from the second year of the policy, not the first year. All these things were actually mentioned in the insurance contract document which Mr. X never took pain to read. One must analyze insurance policy as fine prints may include many clauses and scenarios which can prove to be major points at the time of claim.
2) Most of the health policies don’t cover the pre-existing ailments in the first 4 years of buying the policy. So, any claim linked with pre-existing disease can be rejected at the time of claim.
3) It is important to understand the exclusions also. Like, a pregnant lady who was hospitalized after getting fever was refused the claim because normal fever does not need hospitalization and the lady was admitted because she was pregnant and expenses under maternity are not covered by the policy.
4) Insurance is mandatory for all plying vehicles but statistics suggest that ratio of rejection of claims in motor vehicles is high because of lack of awareness. The biggest thing is that when there is an accident and the driver is not having valid license, the claim will be rejected.
5) Negligence is also a reason on which the claim can be rejected. Like, if your car is stolen because you forgot the keys in the car, your claim will not be accepted. Same way, valid registration papers is also foremost requirement. If you are driving a second-hand car without getting it registered, the claim can be rejected.
6) One has to be very careful while buying home insurance as it is trapful. For example, a policy covers flood but it does not cover damage caused due to heavy rains and water seepage through walls and roof.
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Conclusion: While buying insurance policy of any kind, listening to the agent and paying the premium money is not sufficient. One should go through terms and conditions mentioned in the fine print of the policy thoroughly. So, it is very important to read the fine print of the insurance policy.
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How to study Fine Print before buying an Insurance Plan in India