Mistake: Not Disclosing Other Policies

Disclosure requirements in insurance extend beyond your medical history. When you apply for a new insurance policy — particularly life or health — you are also expected to declare any existing policies you hold. Many buyers overlook this, either because they do not know it is required or because they assume it is irrelevant. It is neither.

Why Insurers Ask About Existing Policies

For life insurance, the insurer needs to understand your total cover exposure. If you are applying for a second term plan, the insurer considers your total life cover when assessing the risk. Very large aggregate covers relative to income raise questions about the financial motivation behind the insurance, which is part of standard underwriting. Declaring existing cover is not a red flag — it is expected and normal.

The Health Insurance Contribution Requirement

Under IRDAI guidelines, health insurance indemnity claims must be handled on a contribution basis when multiple policies exist. Both insurers must be informed of the claim. Failing to disclose an existing health policy when buying a new one — and then not informing the old insurer at claim time — can be construed as a breach of the contribution clause, potentially resulting in a partial or full rejection of the claim from one or both insurers.

Life Insurance and the Moral Hazard Underwriting Rule

Life insurers use a concept called Human Life Value to assess whether the total cover applied for is proportionate to the insured's economic value and income. If an applicant buys ₹50 lakh of cover from five different insurers without disclosing each to the others, each insurer has made a risk decision based on incomplete information. If discovered at claim, the insurer may investigate the circumstances of death more rigorously and can challenge claims where material non-disclosure is established.

How to Disclose Correctly

The proposal form for any new policy will typically include a question such as: "Do you currently hold any other insurance policies?" or "What is your total existing life insurance cover?" Answer accurately and completely. List each policy by insurer and sum insured. This protects you — it means the new insurer cannot later claim you withheld material information.

Porting Health Insurance: Full Disclosure Required

When porting a health insurance policy from one insurer to another, IRDAI rules require the new insurer to be fully informed of your claim history with the previous insurer. Under-declaring claims during a port is a specific form of non-disclosure that is thoroughly checked at claim time. Your new insurer will request claim history from the previous insurer — any discrepancy is noted.

The Practical Habit: Maintain an Insurance Register

Keep a simple document — a spreadsheet or a note — listing every policy you hold: insurer, policy number, type, sum insured, and annual premium. Update it every time you buy or cancel a policy. This register solves the disclosure problem instantly and also helps your nominees locate all your policies quickly in the event of a claim.

Conclusion

Disclosing your existing policies is not bureaucratic form-filling — it is a foundational part of keeping your cover valid and your claims payable. If you are unsure whether your current portfolio is accurately declared across all your policies, a quick audit with an advisor on TruePolicy can give you confidence that everything is in order.