Important Things to Keeps in Mind before Buying a Policy

Buying an insurance policy can be a daunting task. The insurance market is flooded with hundreds of insurance companies and their numerous products. As a result, most of the buyers who are looking forward to buying a policy depend on their agents who guide and assist them. Deciding on the right policy is possible with help from the agent. It is important to note that the right questions which you ask the agent can speed up the decision-making process.

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Additionally, you must be clear about the policy features, benefits, and details before you invest in one which requires you to bring up relevant questions before buying the policy.

What is the Coverage Offered by the Plan?

When you shop around for an insurance policy, you must take a look at the coverage. Insurance coverage can be defined as the liability or risk which is covered for an entity or an individual by way of insurance services. To understand the coverage you can ask your agent whether it is a critical-illness plan or a daily hospitalization plan in case of health insurance plans. The coverage will differ from one policy to another. Say for instance Apollo Munich’s Optima Vital covers 37 critical illnesses whereas HDFC Ergo’s Critical illness Platinum covers 15 critical ailments. Get a clear picture of a policy’s coverage before buying one. The biggest mistake which you can make is to assume that all the policies are the same. 

Get the Insurance Agent’s Help

Insurance sellers today offer an insurance needs analysis calculator which requires the buyer to fill in personal and financial details. The needs analysis calculator reveals your insurance needs. Although these calculators are useful it is essential to note that they are not tailored according to your specific needs. This is where you will need an insurance agent’s help. By asking him pertinent questions you will be able to assess the coverage which you need in a more comprehensive manner. The insurance agent will inform you about the coverage which you need.

Gathering Information on the Insurance Options

Instead of the agent making the choice for you, you can ask him to familiarize you with the plans. You can ask him about the pros and cons of the plans. For instance, a term plan may prove ideal if you are on a tight budget whereas if you have a long-term goal and are ready to shell out the high premium, an endowment plan may be a better choice. You can take the right decision when you know what a policy entails. Asking relevant questions about the plans is important as the agent may have limited knowledge about your financial needs.

Finding Out How the Insurance Company Is Rated

Before you take a pick from the array of policies offered by insurance companies , it is important to check the company’s financial structure. Take a look at the annual reports. The annual reports will give you an idea of what the company does, the policies it offers and also helps ascertain whether the policies cater to the investor’s interests. The insurance agent must have a valid license which authorizes him to sell insurance. The license should be an IRDA license. It is advisable that you do not share your personal details and documents before verifying the license.

Get Your Queries Clarified

Ask the agent clearly about the premium which you will have to pay. The premium will primarily depend on your age. It may also vary between men and women. Your premium will be high if you suffer from a pre-existing disease or smoke. Check about the frequency of the premiums. Are you required to pay the premium once a year, half-yearly or every quarter? In case you miss paying the premium, will you have to pay a late payment fee? Additionally, get clarifications on the maturity amount. Find out how much will be paid out to the nominee in the event of your death. Ask the agent whether besides the sum assured, are there any additional bonuses.

This sums up the important questions which you must bring up before buying an insurance policy. Narrowing down on the most appropriate insurance plan is easy when you take an informed decision.

You may also like to read: Checklist On Buying Life Insurance

Past 5 Year annualised returns as on 01-07-2024

^The tax benefits under Section 80C allow a deduction of up to ₹1.5 lakhs from the taxable income per year and 10(10D) tax benefits are for investments made up to ₹2.5 Lakhs/ year for policies bought after 1 Feb 2021. Tax benefits and savings are subject to changes in tax laws.

*All savings are provided by the insurer as per the IRDAI approved insurance plan.

Tax benefit is subject to changes in tax laws. Standard T&C Apply
~Source - Google Review Rating available on:-

^^The information relating to mutual funds presented in this article is for educational purpose only and is not meant for sale. Investment is subject to market risks and the risk is borne by the investor. Please consult your financial advisor before planning your investments.

#The lumpsum benefit is calculated if policyholder invested ₹10000 monthly for 10 years in the fund with a policy term of 20 years. This Point To Point past performance data of last 10 years has been used to illustrate a scenario for the customers benefit. It is assumed that the past 10 years returns would have also been delivered in last 20 years. This is not guaranteed and not in anyway indicative of what the customer may actually get 20 years from now. The investment is subject to market risk and the risk is borne by the policyholder.

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