Assignment on

Insurance Documents

Submitted to- Mr. Navkiran singh

Submitted by- Miss Neha(21067)
Class – Banking & Insurance 3rd
semester
MEANING OF INSURANCE
DOCUMENTS

Insurance Documents means collectively all slips, cover notes,

contracts, policies, certificates of entry or other insurance
documents evidencing or constituting the Insurances and, in the
singular means any of them.

NEED FOR INSURANCE DOCUMENTATION

Life insurance is a legally enforceable contract between two parties both
of whom are legally qualified to contract. It is therefore, necessary that
the terms and conditions of the agreement must be suitably documented
in a manner that would make it clear that both parties to the contract are
Ad idem i.e., of the same mind. Ad-Idem means that both the parties
understand the same thing in the same sense or are of the same mind
on the same subject. There must be consensus or Ad-Idem between the
parties to the contract. This is possible provided all the terms and
conditions, rights and duties - privileges and obligations are properly
documented in terms which can be clearly interpreted in a court of law.
Between two human beings sometime silence means an acceptance.
But as the insurer is a legal personality entitled to contract verbal
discussion between parties to the contract is not possible and hence
there is a need for documentation. Insurance is also a contract of utmost
good faith and enforced only in the distant future. It is therefore
necessary that the declarations made by both the parties should be put
in black and white for future reference. Any suppression, will ful and
material shall make the contract void. The insured, therefore, has a duty
to declare all that he knows about himself, his health, his financial status
in answering questions contained in the proposal form and other
ancillary documents which may be required by the insurer.
 TYPES OF INSURANCE DOCUMENTS

There are three types of insurance documents:

(a) Insurance Policy: The insurance policy sets out all the terms and
conditions of the contract between the insurer and insured.

(b) Certificate of Insurance: It is an evidence of insurance but does not

set out the terms and conditions of insurance. It is also known as ‘Cover
Note’.

(c) Insurance Broker’s Note: It indicates insurance has been made

pending issuance of policy or certificate. However, it is not considered to
be evidence of contract of insurance.

Various kinds of documents which become necessary at three stages of

a policy –

(1) at the stage of proposal, which if accepted result into a policy,

(2) during the duration of the policy where several alterations may
become necessary

(3) at the end of the policy contract when insurer pays the final claim.
Documents needed at the stage of the
proposal

Proposal form is the basic format which is filled in by the proposer who
wants to take an insurance policy. It can be defined as the application for
insurance.

A proposal form has three portions

(1) The first gives details about the proposer, his name, address,
occupation, the details about the type of insurance that he wants to take
and the name of the nominee to whom the money is payable in case the
policyholder does not survive to take the maturity amount.

(2) The second portion relates to the details of the insurance policy that
the proposer already possesses, the present health conditions and the
personal history of his health, any sickness or accident he might have
had. This is a detailed questionnaire and the proposer is expected to
reply to each question truthfully and honestly. A female proposer has to
reply to certain additional questions specific to her gender.

(3) The last portion of the proposal form relates to the declaration.
Through this declaration, the proposer (i) affirms the veracity of the
statements made in the proposal form in replying to the question (ii)
affirms that he/she has not suppressed, misrepresented or concealed
any fact which may be material to the risk (iii) agrees that this declaration
along with the proposal form shall form the basis of the contract and if
any information is found to be false the contract will be null and void thus
reinforcing the principle of “Uberimma Fides” (Utmost good faith). (iv)
further agrees to take the insurance on the terms and conditions decided
by the insurer.
There are certain other documents which
may be required at the proposal stage.

Age proof - Age is an important factor in deciding the quantum of

premium against a policy. The document proving the age, i.e. age proof
must be reliable and the insured has to undertake as to its truthfulness.
An insurer accepts these documents as standard age proof –

1) Certified extract from municipal records, recorded at the time of birth.

2) Certificate of baptism or extract from Family Bible

3) Extract from school or college records.

4) Extract from service register in case of employees - Government or

semi government or such other reputed institutions which insist on
conclusive evidence of age at the time of recruitment.

5) Identity card issued by Defence department.

6) Marriage certificates issued by Roman Catholic Church.

7) Domicile certificate.

8) Passport.

Non-standard age proofs are those which are comparatively less

reliable and therefore the insurer accepts them with a pinch of salt. In
other words the insurer takes certain precautions before accepting such
age proofs as final. For example, such age proofs are examined by a
senior officer and not accepted as a matter of routine. Another safeguard
is to offer a reduced term of policy so that the policy matures at a
comparatively early age. The maximum age of maturity may be fixed at a
lower age. The insurer even may charge an extra premium to
compensate for the possible understatement of age in such age proof.
Such non–standard age proofs are

(1)Horoscope, (2) service records of employers other than those

mentioned above (3) ESI card, (4) Marriage Certificate in case of a
Muslim proposer., 5) Elders Declaration, 6) Self Declaration, 7)
Driving Licence, 8) Certificate issued by village panchayat, 9)
Electoral role, 10) Ration card.

Age proof is insisted upon for completion of proposal if the declared

age of the proposer is less than 20 or more than 50 or if the sum
proposed is quite high, say above one lakh.

Proof of income- This document may become necessary

whenever the sum proposed is very high. Normally a sum proposed
which is seven to eight times of the declared income is acceptable for
insurance. But proposals do come to the insurer when the known
source of income of the proposer is much less compared to the
amount of insurance desired. A service holder normally does not face
this problem as his sources of income are verifiable. In case of
business people, the assessed income is at times much less
compared to what is a desirable income for the amount of insurance
desired. In such cases the insurer at times calls for assessed income
tax returns, or Chartered Accountant’s certificate etc. Such
precautions are necessary to eliminate the possibility of moral
hazard.
 DOCUMENTS NEEDED DURING THE
CONTINUANCE OF THE POLICY:

 First Premium Receipts and Renewal Premium

Receipts- The First Premium Receipt (FPR) is the
confirmation of insurance. This document is important as it
gives the date of assumption of the risk but its value is nil once
the policy document has been issued.
 Policy contract- Policy document is a detailed document
and it is the Evidence of the insurance contract which mentions
all the terms and conditions of the insurance. The insured buys
not the policy contract, but the right to the sum of money and its
future delivery. The insurer on its part promises to pay a sum of
money, provided of course the insured keeps its part of
promise of paying the installments of premium as scheduled.
The pre-amble to the insurance contract makes the above
statement clear and states that this policy is issued subject to
the conditions and privileges printed on the back of the policy.
The endorsements placed on the policy shall also be part of the
policy and it also makes a reference to the proposal form
saying that that the statements given in the proposal form are
the basis of the contract.
 Renewal premium receipts - Though it is the duty of the
insured to pay the renewal premium on the due date the insurer
sends a renewal premium notice to the insured out of courtesy
and on receiving the premium issues a renewal premium
receipt (RPR) which is an important document and has to be
 preserved as it is the only documentary proof that the due
payment has been made.
 Endorsements - Life insurance policy being a long term
contract, it is quite likely that the conditions may so change
over the time that an alteration or change in the policy
conditions may be required. The insurers normally permit such
changes which are in the interest of the policyholders and also
simultaneously do not adversely affect the insurer’s interest. It
has to be noted however, that the insurer is not authorized to
make any change in the conditions of the policy during its
continuance except such which has been agreed to in the
beginning of the policy. An insurance policy, in this sense is
called an unilateral contract.