Filling in the applicaiton form for my critical illness insurance ?
Once the proposal form is filled in, the proposer has to wait until the company has assessed it, obtained (in some cases) a medical report from the proposer’s doctor, and decided whether or not to accept the risk. If it does, it will generally send a letter saying so and asking for the first premium; it is only after this first premium has been paid, or more exactly after it has been received by the company or its agent, that the cover commences. (A few offices now allow the first premium to accompany the proposal form on simple types of critical illness insurance policies, in which case cover commences as soon as the company accepts the proposal.)
Only after it has received the first premium does the company prepare and send out the policy document, setting out the terms of the contract. The policy document should be kept with care as it will be required (a) for a claim and/or (b) if the policyholder wants to borrow against the policy. If it is lost, the company may for a fee issue a duplicate, but before doing so will require the policyholder to sign a form of indemnity. In the large majority of cases where people think they have lost their policy document, a thorough search will normally uncover it, perhaps in the hands of a bank manager, solicitor or accountant.
The policyholder can often choose whether to pay premiums annually, or at six-monthly, quarterly or monthly intervals. Premiums are normally calculated on the basis that they are paid annually in advance, so that the payment at shorter intervals means the company receives less interest and incurs more expenses than on the annual basis. Monthly premiums therefore carry a loading of 2-5% over annual premiums.
Monthly premiums may be on a “true” or an “installment” basis. In the latter case, if the assured claims between two policy anniversaries the balance of a year’s premiums will be deducted from the policy proceeds. No such deduction is made if the policy is subject to “true” monthly premiums.
Tags: critical illness, critical illness insurance, criticial illness cover