Life insurance is a necessity in the current scenario. This is something that everyone should agree with, taking the unpredictability of life and the possibilities of unforeseen events into account. However, buying life insurance plans is not something to be done in haste. You should always follow a few do’s and don’ts while buying life insurance.
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Dos
- Always be transparent while filling up your life insurance policy document. You should not conceal any information since it will lead to claim rejection in the future for your nominees, jeopardising their financial future.
- Compare life insurance companies and their life insurance plans before finalising your decision. You should compare plans and/or companies on the basis of parameters such as the company’s claim settlement ratio, reputation and track record, plan inclusions and exclusions, the premium amount for a certain coverage, overall policy costs/charges, and so on.
- Use a life insurance calculator to work out your payable premium for a certain coverage amount. It will give you an idea of what you can afford from the outset.
- Calculate the life coverage that you will require. You should not go for any random figure. You can use the HLV (human life value) method or any other method for calculations. Factor inflation into the calculation along with your current liabilities, future goals of your family members and children, future projected monthly expenditure, and so on. The amount should be sufficient to meet all these needs in the future.
- Keep a copy of the proposal form you have signed along with other documents you have signed for future reference. This is immensely helpful, to say the least.
- You should always provide the nominee’s details accurately without any errors. This will ensure that the basic objective of the policy is fulfilled.
- Work out the tax benefits you or your nominees can gain, including deductions under Section 80C and exemptions under Section 10 (10D).
- Check out riders that you can add for tax benefits and to broaden the scope of your coverage.
Don’ts
- Do not conceal any medical condition, illness, or lifestyle habits like smoking while purchasing the policy.
- Do not be in a rush to finalise your insurance policy without going through the fine print. Read all the terms and conditions carefully, along with the inclusions/exclusions.
- Do not purchase life insurance without understanding the key policy terms and definitions. You should know about things like the discontinuation procedure, charges, surrender value, and so on.
- Do not neglect the value of the free look period. This is the time when you can examine your policy minutely once again and return it if you wish. Go through the terms and conditions with care in this period. This duration is usually 15-30 days, depending on the insurer. You can return the policy and get back your premium after the deduction of applicable charges.
- Do not blindly buy insurance from any individual or agency. Always go with a reputed and trusted advisor, platform, or brokerage.
- Do not leave any field or column blank in your policy document. This will only increase your hassles later on and may lead to the insurance policy application being rejected.
- These are some of the core dos and don’ts that you should remember while purchasing life insurance. They will help you take the right decision. Remember to take your time and do your homework before investing.
