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• 12 May 2025

Rights and Duties of Policyholders: What You Must Know Before Buying Insurance

When you buy an insurance policy, you’re not just signing up for financial protection—you’re entering into a legal agreement with responsibilities on both sides. As a policyholder, understanding your rights and duties isn’t just important—it’s essential. Many people assume that once they purchase a policy, their work is done. But to truly make the most of your insurance plan, you need to know what you're entitled to—and what’s expected from you.

What Are the Rights of a Policyholder ?
You, as a policyholder, have legal protections and entitlements. These rights exist to ensure you are treated fairly and transparently by your insurance provider.

1. Right to Transparent Information
You have the right to clear and complete details about your policy. This includes the benefits, coverage limits, exclusions, and all costs involved. Don’t settle for vague explanations—ask your insurer to spell things out.

2. Right to Cancel Within Free-Look Period
Not satisfied after buying the policy? No problem. You can cancel your insurance within the 15-day free-look period (30 days for online policies) and receive a refund, minus minimal deductions.

3. Right to Claim Settlement
If you meet the terms of your policy, your insurer must process your claim promptly. IRDAI guidelines even mandate timelines for this.

4. Right to Grievance Redressal
If your claim is delayed or rejected unfairly, or if you face any service-related issues, you have the right to raise a grievance. Every insurance company must have a grievance redressal system. If unsatisfied, you can approach the IRDAI or Insurance Ombudsman.

5. Right to Privacy and Confidentiality
Your personal and financial data shared with the insurer must be protected. They cannot disclose this information without your consent, except in legally mandated cases.

What Are the Duties of a Policyholder ?
While insurance gives you a safety net, it also comes with responsibilities. If you don’t fulfill your part, the insurer has every right to deny claims or terminate the policy.

1. Duty to Disclose Accurate Information
Be honest when filling out the application—whether it's about your health, finances, or previous claims. Withholding or misrepresenting facts can result in claim rejection.

2. Timely Premium Payments
Missing premium deadlines can lead to policy lapse, meaning you lose coverage just when you might need it most. Set reminders or opt for auto-pay.

3. Reading Policy Documents Carefully
Yes, the fine print matters! Understand what’s covered, what’s excluded, and under what conditions claims can be made.

4. Keeping Personal Details Updated
Got married? Changed your address or phone number? Update your insurer. Outdated information can delay claims or communication.

5. Notifying the Insurer About Claims Promptly
Whether it’s a health emergency or a vehicle accident, report the claim as soon as possible. Delays can cause complications in the settlement process.

Why It Matters: Consequences of Neglecting Duties
Failing to meet your responsibilities as a policyholder can lead to real, painful consequences. Here’s how:

Claim Rejection: Inaccurate information or delay in reporting claims are top reasons for rejections.

Policy Lapse: Forgetting to pay premiums on time can render your policy invalid.

Legal Implications: If fraud or misrepresentation is proven, legal action can be taken against you.

Financial Loss: Not understanding your policy can lead to unexpected out-of-pocket expenses.

Loss of Trust: If you’re not transparent, your insurer may become wary of future claims.

Conclusion
Having insurance is smart—but truly understanding your rights and fulfilling your responsibilities makes you a smart policyholder. It ensures you’re protected when it matters most and builds long-term trust between you and your insurer. So, the next time you consider buying or renewing a policy, don’t just look at the premium—take a moment to read the fine print, ask the right questions, and know your role.

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