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Insurance firms can’t deny claims for 3-year-old policies

In a significant pro-consumer move, life insurance companies will now not be able to deny an insurance claim after three years of commencement of policy on any ground. This has become possible after the amendment passed by Parliament last week in the Insurance Laws (Amendment) Bill, 2015.
According to the amendment, no policy will be called into question on any ground after three years. Life insurance companies will have to prove within three years from the commencement of the policy that the policy-holder had suppressed any health-related information or committed fraud.
“People take insurance to ensure that after their death, people who are dependent on them can still manage with their day-to-day needs. However, sometimes insurance companies unnecessarily reject claims on the basis that the policy-holder had not made full discourse. This had to some extent generated mistrust among people about insurance companies and had hindered their penetration,” government sources said. It is expected to also decrease the time taken by insurance companies to settle claims and bring down insurance-related litigation. However, industry sources said that it will force insurance companies to tighten their rules to issue new policies.

 Article referred: http://www.asianage.com/india/insurance-firms-can-t-deny-claims-3-year-old-policies-722

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