A huge number of people in India are reportedly underinsured even today. Why is that? The reason, of course, is the lack of insurance literacy among common people.  Even though they have a basic idea about insurance, many people find the intricacies of insurance quite difficult to understand. But, buying or having an insurance can be quite beneficial if the insured understands the various perks of an insurance policy.  

Here, we have discussed 5 things that only smart people know about insurance

Free Look Period

If you have already bought an insurance policy but now you no longer want to continue with it because you do not agree with a few terms and conditions of the policy, then don’t worry.  Just contact your insurer or agent and cancel the policy if the first 30 days are not over yet. As per IRDAI, a free look period is provided under all life insurance policies that last more than three years. A free look period is usually of 15-30 days. During this period, the insured person is allowed to review the policy thoroughly and if they are dissatisfied with the coverage or any other terms and conditions of the policy, then the insured person can cancel the policy and can get the refund.  However, it includes one condition i.e. the insured must make written communicate about this to the insurance company. 

Loyalty Addition

If you have completed the maturity period of the policy, then an incentive is given to you by your insurer as the loyalty addition, for keeping the policy active throughout the tenure of the policy. On the basis of the market performance, the rates of loyalty additions are decided by the insurance company.

Loyalty additions are generally offered to motivate the insured investors to stay invested for a longer period of time. However, the loyalty addition varies from insurer to insurer. Generally, 5% of the annualized premium is paid, depending upon the maturity period of the policy. Loyalty additions are provided mainly with ULIPs and Endowment policies. 

Riders

It is not necessary that a life insurance policy will provide full coverage to the insured in certain situations like accidental disability or critical illnesses etc. In such cases, ‘Riders’ plays a significant role. Riders are generally add-on benefits that come along with the basic life insurance plans. In order to avail the benefits of a rider, the insured needs to pay some additional amount along with the basic premium. For example, if you buy a child insurance plan, then you can avail the waiver of premium rider or critical illness rider provided under the policy.

These riders provide additional benefits along with the basic policy cover in case of any mishap.

Premium Reduction

In case you are a non-smoker and drinker, then it is a great advantage as you can save bundles on your premium cost.

Before you buy an insurance policy, the insurer of your policy carries out a procedure called ‘underwriting’, under which the health of the insured is assessed. There are several things that are checked under this process like your present health condition, the chances of you making a claim for a huge amount etc. On the basis of these observations, the insurance company offers a lower premium.

Generally, the premium rates for the non-smokers and preferred non-smokers are the lowest, whereas smokers get a higher premium quote. This also includes one more condition i.e. the insured should have a healthy family background as well. 

Online Buying

Online purchase of life insurance policy not only saves money but is also hassle free and saves a lot of time. Moreover, if you compare the quotes online, then you can get a wide range of options to choose from.  As a smart insurer, you should always check on the wide range of insurance products available in the market. Moreover, one you should check the quotes offered by different insurance products online and choose the best plan that offers the maximum coverage at the minimum premium.

Besides, the buyer can save bundles on their hard earned money because online plan cost less as compared to the offline purchase of insurance plan. The insurance seekers have one more benefit as they can directly buy a policy rather than through an insurance broker.  Moreover, the person gets step-by-step assistance through calls, chats, messages, etc. Further, you can gain more information about the policies with the help of customer reviews, FAQs etc. The online purchase of life insurance plans opens up many options for insurance seekers.  

 As we have seen that there are ample of ways to choose the right insurance plan for yourself and secure the future of your loved ones, all you need to do is proper research and make smart choices to meet your financial goals for future.

You may also like to read: Life Insurance Purchase - Agents versus Online

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