Of certainty, principles ruled the world. For instance, Sir Isaac Newton propagated the acceleration due to gravity. That is whatever that go up must come down due to gravitational force. In like manner, insurance is subject to certain principles.
There is always a mystery surrounding the car insurance premiums and how different people get a different deal. Some of them pay huge amounts for insuring their vehicle while some go away with the minimum. We can control paying premiums only when we can understand the formula of creating the rate. According to experts, all motor insurance prices are calculated after doing a risk benefit analysis, which is the main reason the providers charge different premiums from its customers.
In the year 1956, Life insurance sector was nationalized and in the same year Life Insurance Corporation came into existence. Since then, LIC has been making people aware about the importance and benefits of life insurance policy. But the real penetration of Insurance sector started after the entry of private players in the year 2000, due to privatization of the insurance sector. It extended the benefits and widened the reach of life insurance.
With the efforts of government and insurance companies, the number of people insured in India has increased a lot. But still many people don’t have the right life insurance policy. Many people don’t understand the various aspects of life insurance policy and end up buying a policy which gives them no benefit when required.
So through this article, we will look at some of the tips to buy the best life insurance policy.
Tip 1: Analyze your need for life insurance
You must understand your need for insurance. Your clear purpose for buying a life insurance will help you to filter your search in an appropriate manner. Now, life insurance policy isn’t only limited to protection against life, but it can also be used for various other purposes also. You may buy life insurance as a protection against loan or debt, investment option, saving option or as a retirement plan. For serving all these various purposes, there are different life insurance policies like Term Plan, Whole life plan, ULIP plans and you also need to customize your life insurance plan according to your need. So it is better to understand your basic need for buying a life insurance policy, which will help you get maximum benefit from the policy.
Tip 2: Decide the Right amount of Cover
The right amount of cover puts a strong base for making the best life insurance policy for you. A low amount of cover will keep you away from getting the right benefit while a high amount of cover will dig a big hole in your pocket. It is very much necessary to know how much cover you need. A right amount of cover is built upon the basic four pillars, which are, annual income, future obligations, inflation and debts. Keep all these factors in consideration to choose the right coverage amount which will help you to get what you expect from your policy.
Tip 3: Choose a plan as per your Risk Appetite
It is important to buy a life insurance product as per your need and risk appetite. If you want guaranteed returns on your policy, you should go for a traditional life insurance policy. If you have a high risk appetite and ready to take market risks, then you may opt for unit linked life insurance plan.
Tip 4: Compare Different Policies
Any product bought without comparison can make you pay a higher price with less benefit. Same goes with life insurance policy. It is very much necessary to compare life insurance plans of different companies. And with the availability of internet, comparing life insurance policy has become very easy. Insurance web aggregators provide a very easy and unbiased comparison of different life insurance companies. You can also visit websites of different insurance companies and know about the plan at brief.
Tip 5: Go through Fine Print
It is very much necessary to go through the fine print of the policy. There are many circumstances under which you are not covered in a life insurance policy and you must know them. A brochure of the policy contains all the details and is available on the insurer’s website. You must read every point of the brochure and if any questions arise, you must get it cleared as soon as possible. It will help you to understand the exclusion, inclusion, terms and conditions of the policy at brief.
Tip 6: Check the Insurer details
Always go for a trustworthy insurer. A good insurer will make your purchase, management and claim of policy very easy and quick. A good insurer will have an easy claim settlement process, better service, higher claim settlement ratio and good reviews. And you can check all these parameters very easily. Claim settlement process will be available on the insurer’s website while claim settlement ratio (issued by IRDAI) can be found very easily on the internet. You can read reviews of different insurer’s on blogs and articles of the insurance experts and on company’s website also.
Tip 7: Understand available Riders
Everything comes at a price and the same goes with the riders available with your policy. Riders available with your policy might look very attractive but you need to understand that every rider added to your policy, increases the rate of premium. Even if price is not a big concern for you still, every rider is not useful for everyone. You might add a rider and will be never be able to get benefit from it because you added it without understanding your needs. Riders can do wonders to your policy if required and can also prove to be useless and a very costly affair if not required.
A person with no life insurance cover is almost similar to the person with a wrong life insurance. Just buying a life insurance policy will add up to the number of persons insured in India and will not give you any benefit. So, it becomes very necessary to do a little research and understand your need, so that you can choose the best insurance policy for yourself.