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INTRODUCTION

An insurance policy is a contract between you and your insurer in which you pay a fixed
amount of premium and in return, the insurer provides a cover for the insured event or
property or asset of yours. Risk is always associated with risk of life, death, risk of accident.
Although unfortunate events like these can’t be avoided because they are mostly out of our
control, but still we can minimize such risks by making alternative financial arrangements so
that our life and those of loved ones, wouldn’t be affected.
Buying an insurance policy is a lifetime decision and that’s why it shouldn’t be done in a hurry.
There are many things which should be kept in consideration before buying an insurance
policy so that it will cover all your financial requirements at an appropriate cost. So to help
you with the hassle of buying an insurance policy, mentioned below, is the step by step guide
for buying an insurance policy in India.

In order to understand insurance law, it is useful to understand insurance first. Insurance is a

contract in which one party (the "insured") pays money (called a premium) and the other party
promises to reimburse the first for certain types of losses (illness, property damage, or death) if
they occur.

Insurance law falls into three major categories. First, the insurance company will hire lawyers to
represent the insured in case she is sued for something related to her insurance contract. These
are known as "insurance defense attorneys." For example, an automobile insurance company
will hire an attorney to represent an insured driver when she gets sued for causing another
driver's injuries. The second category of insurance law helps insured people determine when an
insurance company must pay a claim. Third, insurance companies typically hire attorneys to
make sure the company complies with all applicable laws and regulations, which can vary by
state.

There are many types of insurance. The government runs some kinds of insurance, like Social
Security disability, worker's compensation, and unemployment insurance. However, the term
"insurance law" usually refers to the law surrounding private insurance. The most common
types of private insurance are health insurance, automobile liability insurance, homeowner's
insurance, life insurance, title insurance, and malpractice insurance.
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Need of Buying Insurance

First of all you need to understand your need of buying an insurance policy. There are
different types of insurance available in the market and each policy serves different purposes.
Like under Life insurance policy, you have the option to choose from Term insurance
policy, Whole life plan, Endowment plan, Unit Linked Insurance Plan, Money Back Policy,
under a health insurance policy, you have the option of critical illness plan, indemnity plan,
etc. A Term insurance plan gives you an economical way of getting cover while a Unit Linked
Insurance Plan gives you option of investment in addition to life cover. So the type of
insurance policy you choose will depend on your initial motive of buying it.

Basic Terms in Insurance Law

 Policy: The contract which outlines what the insurance company will pay in case of loss.
 Benefit: The money or services an insurance company provides in case of loss.
 Insured: The person who receives the insurance benefit. However, in the case of life
insurance, the "insured" is the person whose life is insured, and the person who receives
the benefit is called the "beneficiary."
 Premium: The money the insured pays the insurance company.
 Claim: A request for benefits when loss occurs.
 Coverage: The types of losses which the insurance company will reimburse.
 Insurance Agent: A person who is licensed to sell insurance in a particular state.

Step 1. Procedure for Taking a Life Policy:

Life policy is based on the principle utmost good faith. The procedure-filling in the form is
quite simple. It is almost like a home industry where the person who wishes to make an
investment in the form of insurance. The first thing to do is to fill in a proposal form.

The proposal form contains the following details:

(a) Name, nationality, permanent residential address, occupation, nature of duties, present
employer’s name, length of service, previous employment record, father’s name in full.
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(b) Place of birth, date of birth, proof of age and district of birth.

(c) Term of insurance, nature of insurance, type of policy, amount to be insured, mode of
premium payable — yearly, half-yearly, quarterly and monthly.

d) Personal information regarding height, weight where the life is proposed.

(e) Details of any previous policies whether one or double insurance.

(f) Family history, history of father, mother, brothers, sisters, children.

(g) Information regarding diseases like epileptics, asthma, tuberculosis, cancer, leprosy, etc.

(h) Information regarding previous records of accident, injury, operation diseases.

Analyze the Amount of Cover You Need

After deciding on the type of insurance you need, the next thing you need to do is to analyze
the amount of cover. Most of the people make the mistake of calculating their amount of
cover only on a single factor, but that is not the right way. A right amount of cover is an
outcome of different factors which are kept in consideration. For example, while buying a
health insurance policy, you should keep always consider current health situation, inflation in
health care, hospitalization requirement, etc. Always consider the different factors related to
your insurance while deciding the type of cover. So sit back, relax, take important points into
consideration, make the required calculations and then decide the right amount of cover.

Step 2. Medical Examination:

If the applicant has a family history of disease then the investment procedure is more detailed
and description about permanent immunity and other family diseases have to be given
including habits, name, income, occupation and salary. A person of normal health almost goes
through a medical examination as a matter of formality.
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Step 3. Medical Report:

The next step after filling-in proposal form is to undergo a medical examination from one of the
doctors approved by the Life Insurance Corporation.

The examination is usually of a routine kind where the identification of the applicant, his
appearance, measurement, weight, condition of teeth, eyes, throat, tongue, ears, condition of
heart, chest, digestion, nerve system and past operation is taken into consideration to find out
the life span of the individual.

Step 4. Agent’s Report:

The third step consists of a report which is confidential in nature. It is made by the agent who is
underwriting the life of the person. His report consist of the age of the person insuring himself,
his health, occupation, soundness of payment of premium, proper health and longevity of life.

Step 5. Acceptance of Proposal:

The Life Insurance Corporation accepts the proposal of the insurer on the commitment made
by the agent and after taking into consideration the doctor’s medical report. The factors which
play a dominating role is the mode of premium, type of policy, the age of the applicant, his
health, occupation and habits.

Once these factors have been considered and the Life Insurance Corporation’s officers are
satisfied, the form is accepted. An investor’s form will be rejected only if he suffers from serious
diseases or the longevity of life cannot be guaranteed.

Step 6. Proof of Age:

The next step after accepting the proposal of a person is to ask him to submit the proof the age.
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The person who is interested in insuring himself may give this proof by submitting any of the
following documents:
(a) A copy of a certificate giving details of the school leaving examination with age or date of
birth stated therein;

(b) Municipal records;

(c) Original horoscope prepared at the time of birth, if no proof of age is available;

(d) In the case of uneducated families, entry in the family record through birth register;

(e) Employer’s Certificate’

(f) Any other satisfactory proof.

Step 7. Mode of Premium:

When an investor takes a life policy on his portfolio he must pay some installment to the life
insurance company for this investment. This installment is called premium and may be paid
periodically.

It may be paid annually, half-yearly, quarterly or monthly. Usually, a period of 30 days is given
as grace beyond the due date of payment of premium. The rates of premium are different for
different kinds of policies offered as investment.

Step 8. Issue of Policy:

When all these formalities are completed the Life Insurance Corporation sends a life policy to
the insured. This legal document between the life company and the insured states the details of
the policy.

It gives details regarding the age, address, sum assured, type of policy with or without profits,
date of maturity, premium, mode of payment of premium, name of person who is entitled to
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receive the ultimate sum, amount at the termination of the policy, the surrender value of the
policy, the settlement of claims of policy and all other conditions of the contract.

The Life Insurance Corporation sends this policy under its seal and signature of its officers. On
receiving this policy, the investor begins his investment with the Life Insurance Corporation of
India.
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CONCLUSION

There are many procedure of taking a policy in Insurance law. But the policy taken by a person
must be in a particular manner .There are different procedure for the different type of
Insurance. For instance, the procedure of taking insurance policy of a Fire Insurance is different
from the procedure of taking policy of Life Insurance. So, it must be kept in mind that what kind
of procedure is to be followed. The Person must be aware of the terms and conditions followed
during the procedure of the Insurance policy. The details filled or given at the time of taking the
policy must be true and must be provided in good faith for taking the insurance.