IC-38 Exam (IRDAI) 2026, conducted by the Insurance Institute of India (III): Read this article to become an insurance agent, insurance advisor, financial consultant, or financial advisor (Article No. 7).

 

A policy lapses if the premium isn't paid during the grace period, typically 30 days. If a policyholder dies during this time, the insurer pays the claim after deducting any unpaid premiums.

Reviving a lapsed policy requires significant evidence of insurability.

Under Section 39 of the Insurance Act, 1938, nomination is allowed.

When taking a loan against an insurance policy: - The policy must be assigned to the insurer. - The nominee's rights are secondary to the insurer's interest. - Loan amounts are capped at a percentage of the surrender value. - Assignment does not cancel existing nominations.

Policies can be split into multiple policies, but extending premium terms, changing profit status, or increasing the sum assured is not permitted.

Life insurance for a person with AIDS may be declined or postponed.

Drinking excessively after taking an insurance policy illustrates moral hazard.

Hereditary history is crucial in medical underwriting, where underwriters assess risk acceptability, postpone, or decline risks, but do not reject claims.

Standard age proofs include a passport or birth certificate, while horoscopes are not accepted.

Substance abuse negatively affects insurability, and the Numerical Rating Method assigns points to risk factors to determine the additional mortality rating for applicants.

Under risk classification, standard lives have anticipated mortality aligned with mortality tables.

Amruta, who is pregnant, should be offered term insurance with a restrictive clause.

Akhilesh, 50, who works in a coal mine, is unlikely to qualify for non-medical underwriting.

Shakeel, with acute diabetes, will probably require the judgment method for underwriting.

Ankur, with lower anticipated mortality than standard lives, can be classified as a Preferred risk, allowing him a lower premium.

A claim is the insurer's obligation to fulfill the contract. Under a money-back policy, claims are paid in periodic installments.

Ibrahim, who assigned his life insurance policy to Joseph, will have the Rs. 50,000 critical illness claim paid to Joseph after Ibrahim's heart attack.

Following Sadhna’s accidental death, an Inquest Report is needed for the claim, unlike in natural deaths.

Death claims within three years of policy start are considered early death claims.

Survival claims are triggered by milestone installments in a money-back policy, critical illness payments, and endowment policy surrenders, but not by term insurance maturity.

A payment under a money-back policy at a milestone is a periodical survival claim.

For Arun, who bought a 10-year Unit-Linked Insurance Plan, he will receive the higher of the sum assured or fund value if he dies before maturity.

Early claims occur when Ranjna dies 6 months after purchasing a term plan, Asha after 1.5 years, and Parikh after 2.5 years. If Nandu dies more than 5.5 years after his term insurance, it’s a non-early claim.

For a standard death claim, beneficiaries must submit the claim form, the burial certificate, and the hospital certificate. An inquest report is required only for accidental deaths.

Under IRDAI regulations, life insurers must settle or dispute claims within 30 days of receiving the documents. As per the September 2024 Master Circular, insurers must now decide on proposals within 7 days and provide documents within 15 days once accepted.

Risk for cheque payments starts when the cheque is submitted, provided it’s not dishonored, per Section 64VB of the Insurance Act, 1938.

A warranty is a strict obligation stated in the policy, while an endorsement alters the original policy terms and takes precedence in case of inconsistencies.

Under IRDAI regulations, insurance companies are not legally required to send a renewal notice 15 days before a policy's expiry; they do so as a courtesy to help prevent lapses.

Health insurance generally covers pre-hospitalization expenses for 30 days before admission, and post-hospitalization expenses for 60 to 90 days. A 30-day grace period is typically allowed for renewing individual health policies, allowing premium payments after the due date without losing continuity of benefits. During this period, while coverage remains active, illnesses contracted may not be covered until premiums are paid. Failure to pay within this timeframe leads to a policy lapse.

Health insurance also covers hospitalization expenses and operates on morbidity principles. Cashless service allows direct payment to hospitals by insurers. The Preferred Provider Network (PPN) comprises hospitals that offer cashless treatment at negotiated rates.

Employers and banks can purchase group policies for employees or customers, respectively, but shopkeepers cannot get one for their customers.

Underwriting involves risk selection and pricing, with both insurers and insureds required to adhere to the principle of utmost good faith.

Insurable interest necessitates that the policyholder have a financial stake in the insured.

Medical underwriting evaluates risk factors without assigning percentages, focusing on age, health status, and pre-existing conditions, often requiring medical tests to determine risk profiles.

In a group health insurance plan, individuals can "anti-select" against the insurer, meaning those with higher health risks are more likely to enroll, leading to unexpected claims that exceed premium calculations.

Group health insurance encompasses both employer-employee groups and non-employer groups, such as associations or bank customers.

In insurance underwriting (IC 38 standards), morbidity refers to the incidence of disease. An individual's occupation can affect their health, but a spouse's job is generally not considered relevant.

The Principle of Indemnity ensures that policyholders are compensated for actual financial losses without profit, with payouts limited to the lesser of the actual loss or the sum insured.

The underwriting process begins with the applicant's Proposal form, with risk rated using a numerical method that offers speed, consistency, and the ability to analyze difficult cases without deep medical expertise.

Key stakeholders in the claims process include insurance company shareholders, regulators (such as IRDAI), and Third-Party Administrators (TPAs), while HR departments are typically not involved.

Claim documentation for a Permanent Total Disability (PTD) must prove a complete inability to work due to an injury, requiring a disability certificate rather than a fitness certificate. Other essential documents include a Personal Accident claim form, an FIR for accidental injuries, and a permanent disability certificate from a civil surgeon.

Overseas travel insurance claims involve an Assistance Company that pays for emergency medical expenses and then seeks reimbursement from the Insurance Company.  **Key Claim Types:** - **Cashless Facility:** Assistance Companies provide cashless service through a Guarantee of Payment (GOP) to hospitals, minimizing out-of-pocket costs for travelers (except deductibles). - **Personal Accident:** Claims are usually reimbursement-based, requiring policyholders to pay upfront. - **Bail Bond Cases:** Covered by standard travel insurance procedures. - **Untenable Claims:** Unsupported claims due to policy exclusions are typically denied.

The primary stakeholder in the insurance claim process is the policyholder. Other parties, like underwriters and agents, support the process.

In case of claim denial in India, policyholders can:  I. Escalate to the Insurance Regulatory and Development Authority of India (IRDAI) through Bima Bharosa or by phone. II. Approach legal authorities:    - **Insurance Ombudsman:** Handles disputes up to ₹50 lakh at no cost, with binding decisions.    - **Consumer Courts:** Options are available under the Consumer Protection Act, 2019.    - **Civil Courts:** For claims over ₹10 crore or complex issues. III. Consult an insurance agent for assistance in the claims process.

**Fraud Case Types:** - **Impersonation:** Pretending to be insured. - **Fabrication:** Creating fake medical documents for unwarranted claims. - **Exaggeration:** Inflating treatment costs or adding fictitious services.

**Domiciliary Hospitalization** refers to home care under specific IRDAI conditions: medical necessity or lack of hospital accommodation. Claims for voluntary home treatment or cases under 72 hours may be denied.

**Medical Coding:** - **CPT Codes:** Standard codes for procedures and services. - **ICD Codes:** For reporting diagnoses. - **DCI:** Not a standard procedure code. - **PCT:** Refers to different terms but not a standardized code set. The Current Procedural Terminology (CPT®) code set is a listing of terms and five-digit codes that primarily describe medical services and procedures performed by physicians and other qualified health care professionals.

**Disclaimer:**   This blog curates information from a diverse array of publicly accessible sources and leverages various tools for effective summarization. Our primary objective is to provide accurate, high-quality content that enhances your understanding. However, we kindly remind you that the author cannot be held accountable for any discrepancies, omissions, or inaccuracies that may occur, nor for any consequences that may arise as a result. Your discretion and critical thinking are encouraged when interpreting the information provided.

**Important Information for IC-38 Exam Preparation:** To excel in the upcoming IC-38 exam, it is crucial to thoroughly review this blog multiple times. Taking the time to understand the material in depth will help solidify your grasp of the concepts. Engaging with the content repeatedly will not only enhance your knowledge but also build your confidence as you prepare.  This blog is the seventh article in the IC-38 exam series. For additional study resources, readers are encouraged to explore the previous articles available on the website. Wishing you the best of luck in your preparations—maintain confidence in your abilities!

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