Page 143 - Ebook health insurance IC27

Sashi Publications

Q4. Explain the rationale behind asking detailed information about the
proposer/ proposed customer.

Ans. More detailed information is asked in a proposal form as data is very vital as it
forms part of underwriting process and also the ' Insurance Contract', wherein
for other places it is just a requirement for database management.

Aperson knowsmorethings about himselfthan others, which isthemain asymmetry
of health insurance from the insured's side. The insurance company is entering into
an insurance contract to protect his health related risks by trusting his statements
in the proposal, assumed to be declared in 'Utmost Good Faith'.

Health related risks can be judged to some extent based on the Age, Occupation,
Place of residence etc. Based on the past data, it is also assumed by the insurance
company that the human beings are prone to more diseases when they grow
older.

Hence age becomes a very important factor while calculating the premium. Health
of an individual also depends on the occupational hazards he faces every day, so
this too is an important detail for the insurer to judge the health status.

The proposal form also requires details about a person's current diseases and the
treatment undergone in recent past. This enable the insurer to understand the
customer's health, the severity of the disease if any, scope of the treatment in
future, approximate cost of such treatments etc.

The details of the family members are required in case of a Family Floater
policy, as there a single sum insured covers the entire family, i.e the sum insured

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