Even if it is not required, it will ensure claim is not rejected on medical grounds

In case of life insurance policies, higher the sum assured higher is the premium the policyholder has to pay. But in some cases the premium for higher sum assured can be lower. According to data from Policybazaar.com, for a non-smoker 30-year old male, 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 the policyholder undergoes a medical test prior to buying the policy. Most life insurance policies offer online term plans up to Rs 50 lakh sum assured without medical tests and only self declaration by the policyholder. But 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 frauds in the sub-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 & Appointed Actuary at Bharti Axa Life Insurance says that in order to deal with fraud, going ahead, insurance companies may stop issuing non-medical policies or may 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 why buyers want to avoid medical test is the fear of premiums rising in case of chronic ailments like diabetes or heart trouble.

But Kumar insists that as term life plans evolve, companies will be more open to offer policies to such people, but with a loading of premium. “We need to think if we are losing customers of a certain kind,’’ Kumar says. Yateesh Srivastava, Chief Operating Office, Aegon Religare Life insurance says that even in case of policies with lower sum assured, that is, sub-Rs 50 lakh, insurance companies offer lower premiums if the policyholder is willing to undergo a medical test.

“About 95% of our policyholders undergo medical test. If you do a medical test, then the chances of the claim getting rejected at the time of claim, on account of medical grounds are minimal,’’ he adds. Yashish Dahiya, CEO, Policybazaar.com says that 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 the Section 45 of the Insurance Laws (Amendment) Ordinance, says that 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 any mis-statement or fraud. So, insurers could become even more stringent while investigating claims and any non-disclosure of medical facts could be looked at severely.