I lied to my Insurer! 🤥🤥

It was a mistake. What do I do?

⦿ Missed mentioning a health condition?
⦿ Do I continue the policy or cancel & start afresh?
⦿ What about S.45 and the moratorium section in Health Insurance?

🙏‍ Retweet to spread awareness🙏‍
Very recently someone asked this question on LinkedIn quoting S. 45 of the Insurance Act as well as the Moratorium section in Health Insurance Regulations.

Is it that simple? What should you do in such a situation?

Let's understand the regulations first.
As per regulations, in Life Insurance insurers can only investigate/reject claims in the first 3 yrs of the policy, post which insurers cannot investigate a claim.

Technically, Insurers have to make the payment - even if there is a fraud, yes even in case of fraud after 3 yrs.
In the case of Health Insurance, after continuous renewals of 8 yrs, insurers cannot decline a claim based on mere technicalities.

They can only decline claims in case they are able to "prove fraud".

Fraud = Willfully hiding information so that the policy gets issued.
So to summarize technically your claims are secure:

⦿ In the case of life insurance, if you have completed 3 years.

⦿ In the case of health insurance, if you have completed 8 yrs, and insurers do not have any grounds to prove fraud.
Now given this information, what do you do when you realize you or your agent has missed providing certain important information
(specifically related to health, lifestyle, or income/occupation)

⦿ Do you just depend on S.45? or
⦿ Do you talk to the insurer?
For instance, someone I know hasn't informed their insurer about a serious illness that occurred some years ago?

Another in DM has mistakenly informed a different illness than the one suffered.

What should you do? 🤔
You need to understand the ground reality before you make any decisions:

Can insurers technically reject a term insurance claim after 3 yrs of coverage citing misrepresentation - NO

Are insurers investigating "suspicious" claims for policies above 3 yrs - YES
In the case of health insurance, it is even worse.

Insurers will always have the right to prove a willful fraud (even after 20 years of renewals) against you to defend against not paying the claim.
So technically, things look simple on paper. But maybe difficult on the ground.

Do you really want your family to go through the stress of investigation and paperwork at the time of claim?
You are buying insurance as a means to protect your family from financial stress.

Why do you want insurance to be a cause of stress?

The entire purpose of spending money and effort to buy the best policy - ensure you are stress-free during claims will get defeated.
What you should do then?

⦿ Come clear. Inform the insurer in writing

⦿ Insurer may either update the policy with the new details or cancel the policy.

Even if it gets canceled you are better off - no point paying a premium, when you won't get the claim
The above is applicable if you are young & can get a new policy

In case of any reason, you won't get a new policy, be aware of the chances of (before you renew):

⦿ claims can be disputed by insurers, even after 3 yrs in Term Life
⦿ claims can get declined in Health Insurance
"Salesmen" in the market will quote S 45 & the moratorium clause in health insurance provide assurances, dissuade customers from canceling the policy.

That's wrong.
Remember, a salesperson's commissions are linked to active policies, not to claims.

Claims are your headache, unless of course, you have a good financial advisor.
Questions? You can ask them on Beshak Forum.
Curated experts from the insurance industry will help you with answers.

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