Page 193 - IC38 GENERAL INSURANCE

the deductible in a policy is Rs. 10,000, the insured pays first Rs. 10,000 in each
insured loss claimed for. To illustrate, if the claim is for Rs. 80,000, the insured
bears the first Rs. 10,000 and the insurer pays Rs. 70,000.

Deductible may also be a specified number of days/hours in case of hospital
cash policies which will apply before any benefits are payable by the insurer.

16. Room rent restrictions

While several products are open ended with the sum insured being the
maximum amount payable in the event of a claim, several products today place
a restriction on the category of room that an insured chooses by linking it to the
sum insured. Experience shows that all expenses of hospitalization follow the
room rent, with higher room rent leading to proportionately higher charges
under all heads of expenses. Hence a person with a sum insured of one lac
would be entitled to a room of Rs 1,000 per day if the policy has a room rent
restriction of 1% of sum insured per day. This clearly indicates that if one
prefers luxury treatment at high end hospitals, then the policy too should be
purchased for high sums insured at appropriate premium.

17. Renewability clause

The IRDA guidelines on renewability of health insurance policies makes lifetime
guaranteed renewal of the health policies compulsory. An insurance company
can deny renewal only on the grounds of fraud or misrepresentation or
suppression by insured (or on his behalf) either in obtaining insurance or
subsequently in relation thereto.

18. Cancellation clause

The cancellation clause is also standardized by regulatory provisions and an
insurance company may at any time cancel the policy only on grounds of
misrepresentation, fraud, non-disclosure of material fact or non-cooperation by
the insured.

A minimum of fifteen days‟ notice in writing by registered A/D to the insured at
his last known address is required. Where a policy is cancelled by the insurer,
the company shall return to the insured a proportion of the last premium
corresponding to the unexpired period of insurance provided no claim has been
paid under the policy.

In the event of cancellation by the insured, premium refund is on short period
rates, meaning insured would receive refund of premium for a percentage less
than the pro-rata. If a claim is made no refund would be made.

19. Free look in period

If a customer has bought a new insurance policy and received the policy
document and then finds that the terms and conditions are not what he wanted,
what are his options?

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