What is a Policy Document in Insurance?

A Policy Document is a document shared by the insurance company containing details of all terms and condition of your policy. You may not like reading the fine print on a policy document, but it is essential to do so if you want to know your rights! Knowing everything about your policy document is even more important when it comes to life insurance. A life insurance policy is not just an asset, it is a comprehensive safety net that financially protects your loved ones when you are no longer around.

Knowing all the minute details of your policy will help you ensure a smooth claim settlement process for your loved ones. Let’s look at some of the most important details in an insurance policy document, plus, a sample document to help you get a feel of what your contract should look like!

But First, Should a Policy Document be Shared Online or Offline?

Both! In the digital age, it is important to keep a soft copy of all your financial contracts. However, it is also important to have an original copy of your policy document in-hand. The physical copy of your document acts as proof of your policy’s validity. Do not lose your physical policy document! If there even comes a time when you family needs to make a claim, the original policy document will be the first thing the insurer will ask for.

If you ever misplace your original policy document, please let your insurance provider know immediately. They will provide you with a new copy of the policy.

Things to Read on Your Policy Document

Whether you like reading documents or not, there are some key elements of a policy document that you need to memorise without fail. These policy details will inform you of your rights, as well as your responsibilities, as an insurance policyholder.

1) Proposal Form with Your Coverage Details

The primary purpose of any insurance policy is to financially cover for your family in your absence. Read even single aspect of the life coverage details mentioned in the policy document. Try to understand how your life insurance cover is calculated. Moreover, some insurance policies also have incremental coverage, meaning that the sum assured (life cover) grows in value over time. It is important to know when; and how; your life coverage increases (if such a provision exists in your policy). Your medical test details (if you took one for the policy) will also be mentioned in the document.

2) All Your Premium Details

Your insurance policy can lapse if you fail to pay your premiums on time! This is why it is essential to know the timeframe of your premium payments (Limited or Regular Pay), the frequency of payment (monthly, yearly, quarterly etc.), and the grace period (period where policy is active even without premium) for your policy. All these details will be mentioned in your policy document. The first premium receipt of your insurance policy will also be attached to your document.

3) Your Policy Term & Maturity Date

Need a refresher on when your policy comes to an end? Simple, just open your policy document and check the end date (maturity date) of your plan. Your insurance policy “matures” when it reaches the end of its policy term. Keep in mind that you will no longer have life cover once your policy term comes to an end. It is extremely important to note down the policy term end date so that you can renew/buy a new policy before maturity.

4) All Your Benefits!

Nowadays, life coverage is not the only benefit provided by life insurance policies. Whole life insurance plans also offer a variety of survival benefits that can help you achieve your financial goals for the future. Survival benefits can be in the form of income payouts, fund value (in ULIPs), cash bonuses (in participating plans), or even as a straight up lumpsum paid at the end of your policy. The minute terms and conditions of your policy will be mentioned in the document.

Moreover, if you have chosen any other optional benefits or riders, their details will also be mentioned in your policy document!

5) Non-Payment Actions & Waiver Clauses

Failure to pay your premiums does not always mean that your policy will lapse immediately. As mentioned above, there is a grace period for all insurance policies. Moreover, even if your policy lapses, you may be able to recoup some of your premiums if your plan comes with a surrender value. If your insurance plan comes with a waiver of premium clause, the details of how this clause can be triggered shall also be listed in the policy document. Waiver of premium means that your policy will continue to remain active even without premium payments, and this clause is generally trigged in cases of critical illness or accidental disability. Read to terms and conditions of your waiver clause carefully to know how to best safeguard your family in case of any unfortunate incident.

6) Details of Your Nominees

And of course, the details of your insurance nominees are one of the most important aspects of your policy document. Ensure that all the nominee details are perfect and up to date. Even a single spelling mistake in your nominee’s name can end up causing issues during the claim settlement process. If you spot any discrepancies in your policy, contact and insurer and rectify them immediately. You can also update your nominee details in case of address or name change.

A Sample Contract

Still confused? Here’s a sample insurance policy document that you can go through. The sample contract provided is for Edelweiss Tokio Life- Zindagi Protect, a comprehensive term insurance plan. Try to find all the sections in the contract that cover the above pointers! And most importantly, keep your policy document safe, and ensure that your nominee’s have gone through it just as thoroughly as you have.

 

Chirag Iyer - BFSI Enthusiast

Chirag is a writer and an avid reader who loves to drink coffee! His other interests include boxing, karate, and singing.