
Understanding the trends of Claim Settlement Ratio Claim settlement rati...
Principle of Utmost Good Faith is one of the basic features of an insurance policy. It means that both the policyholder and the insurer need to disclose all material and relevant information to each other before commencement of the contract. It means that both the Proposer (who wishes to buy the insurance plan) and the Insurer will be honest and not withhold critical information which is required to issue the insurance policy.
The insurer or its agent should disclose all critical terms and conditions of the plan, including exclusions, so that the person taking the policy knows exactly what she or he is buying.
The person who wishes to take the policy should disclose all material facts which can impact the decision to issue the policy or impact the pricing decision of the insurance company.
Insurance Contract being a financial contract needs to follow Utmost Good faith. Commercial contracts are subject to the principle of Caveat Emptor i.e. let the buyer beware. Hence it becomes very important for the policyholder to disclose all relevant information at the time of commencement of the policy so that his family doesn’t have to face difficulty at the time of getting the claim in the unfortunate event of death of the life insured.
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