2.1 – Filling the application right

This chapter is authored by Shrehith from Ditto.

A few months ago, a young chap came to us seeking help — completely distraught after his rejected claim. The individual in question had bought a policy from a family friend — an agent. At the time, the man had intimated to the agent that he had been diagnosed with throat cancer a few years prior. The treatment had been deemed a success, and he was in complete remission.

But he was still sceptical of getting his hands on a comprehensive policy considering the stigma surrounding cancer. To his relief, however, the agent assured him that he would get his health policy without much issue.

And he did!

So by the time he approached us, he had already held the policy for five years. And according to our estimates, we had paid close to 86,000 in premiums — a substantial sum. These were the case facts. So, at first sight, it made no sense to us that the insurer had denied paying out his claim. However, he soon confessed that the insurer repudiated the claim after contesting that his pre-existing condition hadn’t been disclosed earlier. That they were forced to reject the claim citing non-disclosure of medical history.

Okay, that should explain it then. This is a matter of non-disclosure — an open and shut case. Insurance companies are not obligated to pay when customers don’t act in good faith.

So we were just about to break the bad news when he interjected again. In a rather curt tone, he argued that he had disclosed his condition to the agent but couldn’t find a mention of it in his policy document. He was perplexed by this oversight. But as soon as he divulged this new detail, we knew what had happened.

Humans are notoriously rigid, but throw some incentives in the mix, and they’ll become pretty malleable. It’s one of the reasons why the insurance industry is built on a very competitive incentive structure. It’s a product few people want to buy. So you have to have a rather extravagant commission structure. Agents (including us) get paid a lot of money when we make a sale. And sometimes, these incentives can turn perverse — forcing these people to do the most despicable things.

The agent in question had played a dirty trick. He knew that our man was unlikely to get a health plan with his past medical history. Insurance companies don’t mention this explicitly, but it’s an unsaid rule within the retail industry. Cancer patients are a no-go, even if they are in remission. No matter how high you push the premiums, it’s unlikely to compensate for the substantial risks insurance companies will likely take when they cover somebody diagnosed with cancer. And while this may come as a surprise to some of our readers, industry incumbents (including agents) have known this detail forever.

So you’d expect them to be honest with this information. However, that isn’t always the case. Some agents will tell you no such thing. They’ll convince you it’s not a problem. They want to make the sale come what may. And if they believe suppressing material facts will help you land a policy, they’ll do just that. Sure, the insurer may stumble on this nefarious scheme. But that doesn’t happen all the time. And once the policy is issued, the agent stands to make a windfall, at least until you find out that it’s all a sham.

In this case, the agent in question likely concealed this detail to profit off the unsuspecting individual. He filled out the application for the customer without any mention of cancer. Now, consider that most insurance companies call customers and conduct an independent evaluation if a pre-existing disease is mentioned. But without any declaration, they’ll likely issue the policy without further intervention. In other cases, agents may coach their customers to hide sensitive details. They’ll tell them it’s a non-issue and coerce them to follow their cues. And if it’s a family friend — as was the case with our customer, most people wouldn’t think twice.

Another gimmick they pull off is the infamous age-premium discount. When customers push for a discount, agents are left with no choice but to comply. But insurance companies seldom offer such discounts. So agents do the only thing they can. They fill out the application — only they take your age and cut it down by ten years. 50 instead of 60, 25 instead of 35. It looks like an honest mistake, but it’s not. The premiums meanwhile drop substantially. It seems like a bargain at the price point, but it’s only because the agent lied on your proposal form.

This is why it’s imperative for you always to double-check the application. If it’s an online platform, you’ll likely have to do it on your own or at least prompt a sales executive to fill it for you. You’ll have to be doubly careful if it’s an offline agent. Seek out the application and check for any discrepancies. Mistakes can creep in despite vigilance. So spend some time combing through the application, especially if you feel something is amiss. You can even call the insurer directly if you have any additional concerns. But never trust anybody implicitly. Because their incentives may not bode well for your ambitions.


  1. Amit kumar says:

    sir,Aaap foriegn se padhai kiye hoo.Your english is a little bit tough to understand than karthik sir.It’s understable but have some complexity.Thankyou for such a wonderful and helpful content for free.

    • Karthik Rangappa says:

      Amit, if you have any specific questions, do let us know, and we can help you understand the topic better.

  2. Simran Ark says:

    Please upload this on APP

  3. Saurabh says:

    Wow really. That’s new to know.

  4. Anandh says:

    Hi Karthik,

    So this is only for cancer or for all pre existing health conditions. I took a insurance policy last year which mentioned it covered all pre existing health issues after one year from the date of applying policy

  5. Hey Anandh,

    No, this clause isn’t explicitly related to cancer but to all pre-existing medical conditions. Even if a medical condition is completely cured, it’s always better to disclose all these material facts to your insurer and let the underwriting team take a call. That’s the best way to approach it because if the insurance company later finds out about your medical status, which was not disclosed during the proposal stage, it would lead to repudiation/rejection of your claim. The insurer can even terminate the plan.

  6. Manan says:


    What are your thoughts about mental illness? Since it can not be measured like cancer (Stage 1,2) how will it impact premium? And is it necessary to disclose?

    • Hey Manan,

      Yes, in case of any mental ailment ( Bipolar disorder, Anxiety etc.) which has been diagnosed before purchasing of plan or for which the treatment is undergoing, our recommendation is to disclose it to the insurer. However, it is upon the will of the person whose purchasing plan.

      Implications that disclosing or not disclosing can have :

      1. Policy rejection or termination: Chances are that the insurer might not issue the policy in the first place, or if later on, they figure out that this piece of information was not disclosed, they can terminate the policy as well.

      2. Pre-Existing Waiting period: The insurer can impose 3-4 years waiting period on this or any related medical condition.

      3. Loading charges: Every policy issued undergoes an underwriting process where the risk of giving the policy is calculated. It is upon the underwriters that they can also impose a certain percentage of loading charges, usually ranging from 10% – 40%.

  7. Abhijeet says:

    Hi Shrehith. Thankyou for covering this topic as I am about to purchase a medical policy but wanted to go through all the terms at once. The issue creeps in what all is covered in pre-existing disease? Whether my having Thyroid 7 years back which was the case with me which is completely cured now, do i have to mention it?
    I’m taking a family floater plan. Since our parents somehow have some basic medical issues like Joint pain which is not diagnosed till now but while on claiming the policy we mention that the pain has been going on for the last many years earlier to when i purchased my policy, will my claim be admitted or rejected?
    And kindly if you could elaborate more on the pre-existing clause what all medical issues we should mention which we face in daily life like TLC, ECG etc. I think that would benefit a lot of your viewers like me who are struggling to find out how we can be transparent and at the same time not defrauded by the insurance companies.
    Hoping for a reply soon! 🙂
    Thanks for the amazing content.

    • Atul Sharma says:

      Health insurance is a game of probability for the insured and the insurer. Insured pays premiums assuming there’s a probability that they’ll not be able to manage medical emergencies otherwise. Insurer plays on the probability that out of 100 individual sources of premiums, only a certain percentage of them will ask for a claim.

      To reduce their risk, the insurer will always ask for ALL factors associated with your health. So to be safer, it’s always advisable to disclose your Pre-existing condition, even if it was diagnosed and cured seven years ago.

      With that being said, anything which hasn’t been medically diagnosed is not necessary to be disclosed for obvious reasons.

      Still, sincere advice will be to get a full body checkup before you buy your parents a health plan. This will help rule out most, if not all, possible friction at the time of claim.

      In the end, it’s still a grey area and there are many checks and balances to prevent abuse from either end. But it surely helps our case to be extra cautious of our health conditions and disclose all of it while applying for a health plan.

  8. Rajput Arun says:

    A few months ago, a young man came to us for help. He was very upset because his insurance claim had been rejected. He had bought a policy from a family friend who was an insurance agent. When he bought the policy, he told the agent that he had previously been diagnosed with throat cancer but was now in remission.

    Despite his initial concerns about getting insurance due to the stigma around cancer, the agent assured him that he would be able to get a policy without any problems. So he went ahead and purchased the policy, and for five years, he paid a significant amount in premiums, totaling around ₹86,000.

    When he approached us for assistance, we couldn’t understand why the insurance company had denied his claim. It seemed unfair considering the information he had disclosed. However, he then revealed that the insurer had rejected the claim because they said he had not disclosed his pre-existing condition when he applied for the policy.

    At first, it seemed like a clear case of non-disclosure, where the insurance company had the right to reject the claim if the customer didn’t act in good faith. We were about to deliver this unfortunate news when he interrupted us. He argued that he had informed the agent about his condition, but there was no mention of it in his policy document. This revelation helped us understand what had happened.

    In the insurance industry, there is a competitive commission structure that provides incentives for agents to make sales. Sometimes, these incentives can lead to unethical behavior. The agent in this case had tricked the customer. The agent knew that it would be difficult for someone with a history of cancer to get a health insurance policy. Even if the premiums were high, insurance companies were generally reluctant to cover individuals who had been diagnosed with cancer, even if they were in remission. This information was known to industry insiders, including agents.

    Instead of being honest about this fact, some agents would conceal it and convince customers that getting a policy was not a problem. They would do whatever it took to make the sale, even if it meant hiding important information. Once the policy was issued, the agent would profit from the commission, at least until the customer discovered the deception.

    In this case, it seems the agent intentionally concealed the customer’s cancer history to make a profit. The agent filled out the application without mentioning the cancer. Normally, insurance companies would conduct an independent evaluation if a pre-existing condition was disclosed. However, without any declaration, they would likely issue the policy without further investigation. In other cases, agents may even coach customers to hide sensitive details, reassuring them that it’s not an issue and pressuring them to follow their lead. When the agent is a family friend, as in this case, people often trust them without questioning.

    Agents also use another trick known as the age-premium discount. When customers request a discount, agents sometimes falsify the application by reducing the customer’s age by ten years. This lowers the premiums significantly, making it seem like a good deal. However, it’s a dishonest practice by the agent.

    That’s why it’s crucial for you to always double-check your insurance application. If it’s an online platform, review it carefully or ask a sales executive for help. If you’re dealing with an offline agent, make sure to examine the application for any mistakes or discrepancies. Even if you’re unsure, take the time to go through it, especially if something doesn’t feel right. You can even contact the insurer directly to address any concerns. Never trust anyone blindly because their incentives may not align with your best interests.

    I have simplified the language of this article to make it easier to understand using common words.

  9. Pranav says:

    Will this module also cover term insurance as well ?

  10. Arun says:

    Thank you for sharing valuable lessons. If the customer has a pre-existing medical condition (let’s say diabetes) and he was not aware when he bought the policy. Would that lead to a problem ?

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