A life insurance is a legal contract between two parties. Therefore, the parties who wishes to successfully enter into the contract has to take a number of steps. These steps comprise the procedures for effecting life insurance policy.
The following are the important steps that are taken to effect the life insurance policy.
The following are the important steps that are taken to effect the life insurance policy.
1. Proposal
A life insurance policy has to be proposed by ab intending policyholder. Therefore, he has to acquire printed proposal forms, which are available free of cost either with the insurance company or its agents. The proposer is required to dully fill up the form and submit it to the insurer with required enclosures. While filing up the form, he must give accurate information on all the material references.
2. Personal health statement and medical examination report
One of the sections of the proposal form is designated as personal health statement and medical examination of the prospective policy holder. Under this section, the proposer has to record his personal medical history inclusive of bio-data. Usually, this section covers the following aspects:
* Bio-data
* Physical measurement and identification marks such as height, weight and special identification marks.
* Smoking, drinking and drug habits, if any
* The disease that the proposer had in past, the treatments undergone and the profile of the doctor attended.
3. Agent's confidential report
Since the insurer is not in direct touch with the proposer, the agent's report is very important to it to decide whether or not to accept the proposed policy. The agents are usually required by the insurer to supply information about socio-economic status of the proposers together with their perception of the risk involved in the life of the assured.
4. Proof of age
The age certificate is an important document in life insurance contract, because it is on basis that the insurance company estimates probable risk and ascertains the amount of premium to be charged to the proposer.
5. Acceptance of proposal
The proposal form and the accompanying reports are thoroughly scrutinized by the insurance company to take the decision on the proposal. If the proposal is good and the medical report and agent's confidential report are favorable, then only the insurance company accepts the proposal.
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6. Payment of premium
The payment of the first installment of premium is very important in the life insurance, because it is from this date that the risk of loss of life is insured. Upon the receipt of the first installment of premium, a receipt is sent to the policyholder which serves as the acknowledgement of contract between him and the insurance company.
7. Issue of insurance policy
In due time, a formal document called 'life insurance policy' is prepared and sent to the policyholder properly sealed, signed and stamped. This contract of life insurance describes all the particulars of life insurance and the terms and conditions of life insurance contract.
