Medical test for term plan always advisable

Do it even if not mandatory; this will ensure claim is not rejected on medical grounds

In the case of life insurance policies, the higher the sum assured, the higher the premium the policyholder has to pay. However, in some cases, the premium for a higher sum assured can be lower. According to data from Policybazaar.com, for a 30-year-old male non-smoker, the premium for a Rs 40 lakh policy bought online is higher than the premium for a Rs 50 lakh policy. This is because insurance companies offer a discount for policies where holder undergoes a medical test prior to buying it.

Most life insurance policies offer online term plans up to Rs 50 lakh sum assured without medical tests and only a self- declaration by the holder. However, they charge a higher premium, as the risk is higher for them in such cases. Some companies offer online term plans even up to Rs 75 lakh without medical tests, but at very high premium.



Unfortunately, this is one reason why insurance companies see a higher instance of fraud in the under Rs 50-lakh segment. There are cases where the person had died even before the policy was purchased. Or where the policyholder did not exist at all. Rajeev Kumar, chief and appointed actuary at Bharti Axa Life Insurance, says in order to deal with fraud,  companies might stop issuing non-medical policies or insist on personal verification of the policyholder even for online policies for lower sum assured. “In case of a medical test, we are at least seeing the person,’’ he says.

 

One reason buyers want to avoid a medical test is the fear of premiums rising in case of chronic ailments such as diabetes or heart trouble. Kumar insists that as term life plans evolve, companies will be more open to offering policies to such people but with a loading of premium.

“We need to think if we are losing customers of a certain kind,” says Kumar.

Yateesh Srivastava, chief operating officer at Aegon Religare Life insurance, says even in the case of policies with a lower sum assured, under Rs 50 lakh, companies offer lower premiums if the policyholder is willing to undergo a medical test. “About 95 per cent of our policyholders undergo medical test. If you do a medical test, the chances of the claim getting rejected at the time of claim, on account of medical grounds are minimal,” he adds.



Yashish Dahiya, CEO of Policybazaar.com, says in case of older buyers, that is, above 50 years, even for sub Rs 50 lakh policies companies will insist on a medical test. But even for younger buyers, it is advisable to opt for a medical test, to ensure hassle-free claims.

This becomes even more important now, as Section 45 of the Insurance Laws (Amendment) Ordinance says no claim can be rejected after three years for any reason. This means the insurer has a three-year window to reject claims on grounds of mis-statement or fraud. So, insurers could become even more stringent while investigating claims and any non-disclosure of medical facts could be taken seriously.