Insurance is not bought like a commodity - like, say, a soap, where you go to the market and simply pick your favourite brand and pay for it. When a customer is interested in buying a product, s/he has to apply for the product. Only when the application is approved by the insurance company, the policy is issued to the customer and the risk cover actually starts.
1. Evaluation Of Your Application
When you apply for an insurance policy, the insurance company will evaluate your risk and eligibility.
● Risk: The risk you carry will be compared to the standard risk assumed by the insurance company. Here, the insurance company will look at two things -
➔ Your profile
The insurance company will ask you to provide details related to your occupation, income, location, etc. They will compare your profile against the standard profile they have defined in the policy. They will then determine whether the degree of risk you carry is higher than what was assumed when the product was designed.
➔ Your health
Similarly, the insurance company will want to know your health status. They will then understand if you have a lifestyle or a health condition that puts you in a higher risk zone than a standard healthy individual as assumed when designing the policy.
● Eligibility: Next, your eligibility will be evaluated too. The insurance company will want to ensure that you are buying the insurance policy clearly for the financial security of your family, and not to simply make a gain from the product or the scheme.
Your risk and eligibility will be evaluated by a team of professionals at the insurance company called underwriters. The underwriter’s job is to -
➔ Evaluate every application or proposal that the insurer receives.
➔ Decide whether to provide the cover or not, after the application for the policy is made.
➔ Define whether a particular customer’s risk is higher than the standard risk defined.
➔ Determine the additional premium that must be charged in the form of loading, if a customer carries a higher risk than usual.
2. Policy Issuance
If the underwriter approves your application, the operations team at the insurance company will issue the insurance policy to you. As soon as the policy is issued, the risk coverage will begin.
3.Paying The Premiums
Based on the premium payment terms under your policy, you will have to continue paying the premiums. Make sure you don’t miss your premium payment due dates because the policy and the coverage will only remain active as long as you complete all your premium payments on time.
4. Making A Claim
In the unfortunate event of your death during the policy term, your nominee or family will have to inform the insurance company. They will have to submit several documents and provide details of the death, etc. Then, based on the terms and conditions of the policy, the claims team of the insurance company will evaluate the claim. If approved, the claim payout will be made to your nominee.