Applying for Insurance

 

There are many ways in which people apply for insurance. Years ago, this was usually by completing a document called a proposal. But for most domestic, particularly fire and general insurance, this can often be done over the phone. Generally the insurance company will ask a number of questions, and at the end of those questions will either decline or offer insurance depending upon the circumstances. 
 
Even when the process is completed over the telephone, it is important to remember that this is a formal process, and your answers will be recorded either by a tape recording or by the person you are speaking to. If you answer any questions incorrectly, it may invalidate your insurance, and so it is important to listen to every question carefully, and answer it accurately. There is no point in providing incorrect information because you may be wasting your money when you find your insurance avoided when you need it most at claims time.
 
The same applies to written applications, whether for house, contents, car, business, health or life insurance. The application process is a formal process that must be taken seriously.
 
In relation to health, income and life insurance policies, the questions about medical history can often be confusing. They are very carefully crafted by the insurance company to often be as wide as possible.   You are simply required to tick a box and, provided you do not disclose any adverse information, the insurance will be granted. You will then hear nothing more about it for many years. But when you do make a claim, you can be certain that the insurance company will then check the information you have provided. The insurance company may seek your medical records from your general practitioner or other doctor, and compare those to the information you provided. If there are any discrepancies that may be material, the insurance company may avoid your policy and therefore refuse your claim. This process of what is commonly called retrospective underwriting is most controversial. The Privacy Commissioner recently questioned the ability of insurance companies to demand entire medical files, and the media has often been critical of insurance companies waiting until claims time to truly investigate.
 
Our advice is to consider the questions very carefully, and if in doubt at all, ask your insurance company to conduct your doctor before taking out the insurance. If the insurance company wants to see your medical records, then they should ask for them upfront, and not wait until claims time. 
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