Finance USA

Aug 25 2019

12 best tips for buying life insurance policy in India, buying term life insurance policy.

#Buying #term #life #insurance #policy

12 best tips for buying life insurance policy in India

12 best tips for buying life insurance policy in India. Why did I write this article? The common dilemma that faces an individual once he understands he needs insurance What is the best insurance policy? How to choose it? What are the things to keep in mind? We understand that not every Indian has the best financial info he needs to make the best decision. Most of the time they are sold the wrong product.

So, that s why we wrote this article. We give you at least the basic parameters you need to know before deciding. Here we go..

12 best tips for buying life insurance policy in India

Tip #1: Fully understand why you need insurance

You should always buy insurance with a purpose. If there is no purpose, better don t buy as you will buy unwanted products.If you do not have any dependent, there is no need to buy life insurance at all. You will better off with a good mediclaim/health insurance. But if you do have dependents and they cannot sustain their current standard of living in your absence, then you definitely need to buy life insurance.

Tip #2: Buy only plain term insurance policy.

The primary aim of insurance is to secure your loved one s financial needs when you die (fortunately/unfortunately we all have to Buying term life insurance policy) and make sure they are comfortable in your absence. Yes, that is the only reason why you should buy insurance. Term insurance is the best option to fulfill this need.

Buying term life insurance policy

Tip #3: Determine accurately the Coverage or Sum Assured

Calculating the Sum Assured is the most critical step once you have understood the need and chosen the right insurance policy type. You do not want to make the mistake of under-insuring yourself .This will not solve your purpose of buying insurance. A general thumb rule is approximately 8-10 times your gross annual income minimum. Add your debts to arrive at your sum assured amount.

Tip #4: Choose a trust worthy insurance company

You have a lot of options when you need to choose the best insurer. If you are not comfortable with the attitude and feel when you buy the product from the insurer, you might guess the kind of experience your family might go through when you are absent. A good way is also to look for a high Claim Settlement Ratio.

Tip #5: Avoid adding riders if you do not understand them fully

Brokers/advisors will ask you to add riders. Yes, it is a good advise. But you will be better off without buying them if you don t understand them fully. You should buy them only if you know what purpose it will server. Remember, riders are not free. The cost of riders will be added to your insurance premium. You need to shell out extra money to have them.

Tip #6: Reveal all truthful information. Fill the form yourself

A major reason for claims getting rejected is because insurers claim that true details were not provided when taking the policy. How many of you fill your own policy form? Most of the time it is filled by the insurance agent or company itself. Providing incomplete/false information can lead to claim rejection. If you are smoker or drinker, include it in the form. You are better off paying a few 100 s extra than losing the benefits of the policy when you need it most.

6 done already? Last 6 tips for buying life insurance

Tip #7: Know the exclusions. Ask the right questions

All insurance policy will have some exception. These are circumstances under which the insurer says he will not pay you. Read the product brochure before buying. Know the exclusions. You must be aware of the product inside out. Ask the right questions.

Tip #8: Buy when you are young.

This could have easily been the tip #1 or 2 as it is very important. The cost of an insurance policy increases as you grow older. So you are always better off buying an appropriate policy when you are young.

You are a product in your insurer s eyes. When you are young there is less chances of your death. As you grow old, your value decreases and you are likely to have more problems. So the cost of premiums is low when you are young. Some insurers even stop selling their policy once you reach 60 years. Buy your policy now and lock in the premium for future.

Tip #9: Consult a paid financial planner/advisor

Insurance advisors are motivated by their commissions. Most will try to sell the product which offers the best commissions. You will be always better off getting advice from a quality paid consultant/planner who does not co-sell products. Free advice is not necessarily best advice. In India, the irony is many agents do not understand what they sell. They themselves may be financially ignorant. A sales meeting is conducted every month and agents mostly tell you whatever is told to them in these meetings without proper self-analysis. Things are improving but are far from ideal.

Tip #10: Keep investments and insurance separate.

One of the best tips for buying life insurance. Insurance companies come up with innovative products which will fill up their coffers. You are interested in your financial health. Not their profits. Insurance types like whole-life, endowment, money-back policies pay very high commissions(as high as 20-40%). You are better off buying a term insurance and investing the difference elsewhere. Check out why in below article

Tip #11: If you have separate dependents, buy separate policies

Nuclear families are the new order of the day. When I do financial planning for individuals, many of them say their parents and wife/dependents may be separate. This was a rare instance before but the trend is on the rise. So if you are doubtful and plan to ensure both do not suffer, then buy two separate policies calculating the amount each dependent will require.

Internet has made buying so easy. Online term insurance policies are much cheaper and very easy to buy with a click of a mouse (Note: Do due investigation prior to buying). Compare policies and choose the best fit.

If you are buying through an agent , make sure he is in it for the long run. You do not want to buy from a newbie who is gunning for commissions part-time. Your family might need assistance during claim and you do not want your agent to be unavailable at that time after earning your commission.

Just keep these in mind and you will not end up with a garbage product. Did you like 12 best tips for buying life insurance policy in India . Then educate your friends to avoid mistakes by sharing, tweeting this article.


Written by FRANCE

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