LIC insurance documents and their special features

The life insurance contract is a long term one, lasting 30 or 40 years.

In the absence of proper documentations, it may not be possible to know the
dues and rights or even the identities of the persons concerned.
 PROPOSAL FORMS
 The first document in the insurance file is the proposal for insurance.

This is to be completed by the proposer in his handwriting and signed in

the presence of a witness.

The proposal form and the statements therein are important as these
statements form the basis of the life insurance contract.

If the proposer is illiterate, the left thumb impression has to be attested by
a third party, who has to give a declaration that the questions were explained
to him and answer dictated by him were recorded truthfully and were read
out to him and were understood by him.

The proposal form contains a declaration at the end stating that all the
statements therein are true in every respect and that if any untrue statements,
the insurer will be entitled to declare the contract as null and void and forfeit
the moneys already paid.
The proposal form will contain information as to-

 the name and address of the proposer

 name of the person to be insured, if different

 details of the person to be insured like his occupation and date of birth

 details about the insurance required like plan, term and sum assured
riders to be added

 Details about earlier proposals for insurances.

 Further particulars required along with the proposal,
would include-

 preferred mode of premium

 whether the policy should be backdated, to get the benefit of a lower age
and lower premium

 employment particulars to enable SSS deductions and

Nomination

 Proof of age is usually called for along with the proposal.

Since 2006, proposers are required to furnish, along with the proposal, a
photograph and proof of address, in terms of law to prevent Money laundering.
 PERSONAL STATEMENT

 The personal statement is to be completed along with the proposal.

 This asks for particulars about the state of health of the person proposed to be insured,
his family history, his personal habits, medical consultations and illness, absence from
work due to medical grounds etc.

if the person is a female, additional questions will have to be answered.

if a medical examinations is done, either because of the standard rules of the insurer or
because the underwriter asks for it, the medical report and any other reports, become part
of the documentations

a copy of the proposal is to be supplied to the policy holder within 30 days of the
completion of the contract- as per IRDA 2002 rules.
 FIRST PREMIUM RECEIPT (FPR)

 The underwriter’s decision on the proposal may be to accept at OR otherwise.

 If it is accepted at, the policy can be commenced immediately, provided the full
premium had been paid along with the proposal. The FPR will be issued.

 If the acceptance is not at , the proposer has to agree to the modified terms and pay the
balance premium if any, before the FPR can be issued.

 The IRDA regulations require that the decision on the proposal should be made by the
insurer within 15 days

The FPR is the evidence that the insurance contract has begun.
The policy document, which is the evidence of the contract, may issued only after some
time.

 If the claim arises before the policy is issued, but after the FPR is issued, the insurer is
liable.
The FPR will state-

 The proposal for insurance has been accepted & that the premium has been
received.

 It will give the particulars of the policy- such as policy number, the date of
commencement of risk, date of maturity, date of last payment of premium, premium
amount, mode, name and address of the life assured. The date on which next
premium becomes due is also stated.

Strictly, the issue of the FPR signifies the conclusion of the contract and it is
binding on both the parties.

However, the regulations issued by the IRDA, provided that the policy holder has
the option to withdraw from the contract within 15 days of the issue of the policy.

He will be then, be entitled to refund of the premium paid, less cost of risk for the
short period and expenses towards medical examination and stamp duty.

 This period of 15 days is called the “free lock-in period” or “cooling-off period”
 RENEWAL PREMIUM RECEIPT (RPR)

 When the policy holder pays the premium due under the policy subsequent
to the issue of the FPR, RPR are issued.

 These RPRs are important to prove payments, as defaults can lead to

termination of the contract.

Renewal receipts are not issued in respect of policies under SSS. The
consolidated cheque received from the employer is adjusted as one
transaction. Salary slips would show deduction of premium from salary.
 THE POLICY DOCUMENT

 It is the evidence of the contract.

 If it is lost, a duplicate policy will be issued on request.

 The policy document is to be signed by the competent authority and stamped, according
to the Indian Stamp Act.
 The preamble to the policy states that the proposal and declaration signed by the party
form the basis of the contract.
 The operative clause lays down the mutual obligations of the parties regarding payment
of premiums etc.
 The schedule gives all essential particulars of the policy.
 instructions issued by the IRDA require that the policy information statement should be
issued with every policy stating-
• the facility available for mode and periodicity of payment of premium
• Person or office to be contacted for any enquiry or service relating to the policy.
• Importance of intimating change of address of policyholder and nominee
• Availability of mechanisms to address grievances/complaints
• Information on location of insurance ombudsman .
 ENDORSEMENTS

In a pre-printed policy form, the standard policy conditions and privileges are
printed. If any of them need modification, in keeping with the terms of acceptance,
endorsements are attached to the policy.

RENEWAL AND BONUS NOTICES