Purchasing an insurance policy is one of the best financial decisions one can make. Being insured protects you from life’s calamities because it can cover you from all kinds of losses, depending on the kind of insurance policy that you buy.
Whether it is health, life, home, auto or renter’s insurance, it is important to have the right kind of coverage so that any unexpected circumstance does not lead to financial ruin. Committing to any kind of insurance policy is time-consuming and requires constant substantial investment, therefore it is important to better understand key aspects of the insurance policy you are interested in to be sure that the coverage you will receive is suited to meet your needs.
Before making any decision regarding an insurance policy, it is important for you to ask the right questions.
Why am I buying?
Insurance is meant to protect your and your family’s financial future against uncertainty. It not only gives you substantial financial support, but it also allows you to fulfill various needs like:
- Wealth Generation: For achieving financial aspirations and goals
- To Secure Your Children’s Future: For securing your children’s future, by helping you plan for their educational needs, their marriage and their dreams.
- Saving for Retirement: To help you maintain your lifestyle in your golden years.
- Savings: To help you live in the present with confidence and the knowledge that your future is secure.
How much coverage do I need?
Coverage is the amount of financial compensation you or your nominees will receive upon completion of the term period of the policy. Basically, it is the extent of funds that needs to be calculated prior to committing to a particular insurance policy depending on your particular needs. These are a few simple questions you must answer to help you figure out what amount of coverage is right for you.
- How much of the family income do you provide?
- How many people are financially dependent on you?
- What are your current liabilities?
What premium do I need to pay and for how long?
To maintain the validity of the insurance policy you will be expected to pay a premium which is the amount that is to be invested in the policy. This premium is supposed to be paid for a specific time period known as the ‘Pay Term’. The amount varies depending on the type of insurance policy you purchase.
There are several insurance policies that allow for ‘Single Pay’ which allows you to pay a one-time premium or you can choose ‘Regular Pay’ where you would be expected to make multiple payments.
Depending on the type of insurance policy, the regular pay term can be monthly, quarterly, half-yearly or annual. It is important to note that the payment term is different from the policy term. Pay term is the amount of premiums that we are expected to pay for the duration of the policy and policy term is the end or the total duration of maturation that the policy requires.
It is important to commit to an insurance policy only when you are able to keep up with the premiums that are expected in a timely manner over the duration of the insurance policy.
What are the benefits of my insurance policy?
It is better to be informed than misinformed. This is why it is imperative to ask the insurance company to provide all the correct insurance policy literature related to the policy you are interested about. Also, it is important to study the sales brochure and other promotional material to understand exactly what kind of benefits you can avail from the insurance policy.
It is also very important to read and understand the risk factors, terms and conditions that are associated with the insurance policy.
Finally, do not hesitate to inquire and contact your insurance provider regarding any doubts or queries you might have.
What should I keep in mind while filling the application form?
Before filling the application form, verify all the policy details and ensure that they are correct and satisfying to your needs. It is in your best interest to provide the insurance company with correct information regarding your personal, medical and contact details to facilitate smooth processing and integration of your application as well as ensuring hassle-free claim processing at the end of the policy term.
While filling the form, always remember to:
- Check and fill the necessary details by yourself and only then sign.
- Ensure that your details match the KYC documents submitted by you.
- Complete the nominee details and inform your nominees.
What are the malpractices I should be aware of?
Always keep the following in mind:
- Do not fall prey to promises of guarantee unless specifically mentioned in the product material.
- No insurer can offer rewards or discounts on a policy purchase
- Always check the advisor license if he has not been referred to you
- Inducement to purchase insurance is illegal, in case you come across such instances immediately inform the nearest police station and lodge a complaint against the person.
Before committing to any insurance policy it is important to run through a checklist of all of the questions mentioned above and ensure that you have the correct answers for each. Keep these tips in mind so that you get the best insurance possible policy that suits your needs and requirements.