Insurance is a legal contract in which two parties (Insurer and Insured) come into a mutual consensus. Like other contracts, there is no scope of verbal commitments; therefore, while signing such contracts, one ought to be aware of each and every aspect of it such as exclusions, deductibles, surrender value, cash value, and the like. Generally, it’s your insurance mediator or agent’s duty to tell you everything in straightforward words. Although every insurance agent follows insurance selling process, however, in some or rare cases we see policy misselling cases. So here, we have come up with some basic questions that you should ask your insurance agent to make sure you’re buying a worthy and genuine policy and which will help your family in rigorous times.
Life insurance is a long-term investment and one should research thoroughly to pick a best and appropriate policy. Insurance policies are subject to certain terms and conditions such as policy term, exclusions, coverage etc. Therefore, before opting an insurance product, one should aware of insurance policy wordings.
Ask questions given below to your insurance agent to make sure you’re going to buy a policy that fulfills your insurance needs without putting extra burden on your pocket.
Do I need a life insurance policy?
Life insurance policies are designed to provide financial help when insured demises. Therefore, before purchasing a life insurance policy, ask yourself and your insurance agent “Do I need a life insurance cover?” Simply, if you have dependents who cannot survive without you such as parents, spouse, and children, then you certainly need a life insurance cover. On the flip side, if you’re a youngster and no one depends upon you and your parents have a regular source of income like pension, then buying an insurance policy would not be a good decision for you; in that case you should seek investment options such as SIPs, stock market, gold bonds and the like.
If you’re planning to start a family then you can buy a life insurance policy.
Read: 10 Important Things to Consider Before Buying a Life Insurance Policy
What are the different types of life insurance policies?
This question can help you understand difference between term and whole life insurance. Let me give you a quick glance, term life insurance, also called pure life insurance, is designed to provide death benefits only; which means, no benefits will be paid if policy holder survives the policy term. On the other hand, whole life insurance policies are tailored to give survival benefits along with death benefits. It is remarkable that term life insurance policies are significantly cheaper then whole life insurance policies.
Read: Types of Insurance: Explaining Life, Non-life, and Re-insurance
How long has the company been in insurance business?
This is a basic and skippable question, only if you already know about the company, but it can give you an idea that you’re dealing with a genuine company. The watchdog authorities, who regulate and monitor insurance marketplace in your province like IRDAI (Insurance Regulatory and Development Authority of India), continuously track activities of all insurers to curb insurance misselling and frauds. These authorities can deprive insurers from providing insurance services if they (Insurers) are not complying with insurance selling guidelines.
Therefore, it’s advisable that check registration of your insurance company before buying an insurance policy.
Read: How do I Check if an Insurance Company is Legitimate?
How much life insurance cover should I buy?
Generally, insurance agent suggests you amount of cover that you should take. It’s presumed that insurance agents give you exact idea about the coverage that you should buy, and there’s no doubt, but to my mind, you should also engage in this decision. After all, it’s about you and your money.
Many experts from the insurance marketplace suggest to buy insurance cover between 10-20 times of your income. But one can increase or decrease insurance cover depending on financial conditions and insurance needs.What does my policy cover and doesn’t cover?
It’s a very important question to ask from your insurance agent. Don’t rush and stay clam while purchasing a life insurance cover. Ask your agent to explain events that your policy covers and various exclusions in your policy. If your insurance agent denying it by saying he is running late and he has to attend other clients then let him go but don’t buy an insurance policy without knowing what is it exactly cover. You can take policy brochure from him to read various terms of your contract.
Is the premium rate flexible?
Financial conditions change time-to-time. In this uncertain era, rich can become poor or vice versa. Therefore, it would be better for you if your policy allows you change your premium rates. Basically, you pay a fixed premium throughout the policy tenure but some insurers allow customers to change premium rates if they’re going through financial hardships. Although, it is not an important factor that a policy should have, but it adds an extra privilege to your policy.
What happens if I unable to pay premiums?
Some unexpected expenses may hinder you to pay your premiums at time so in such situations you should know that what will happen to your policy and you should be aware of consequences. Therefore, ask your agent to tell you what you can do if such situations arise. Usually, after grace period your policy lapses and to revive it you need to pay some penalties and it may also affects your coverage.
Should I add riders to increase coverage?
Policyholders add riders to their life insurance policies to get additional benefits and coverage. You can add riders to your policy to cover an event that your life insurance policy doesn’t cover alone. Riders are inexpensive and give you more benefits than they cost therefore ask your agent to know whether you need them.
Is there any discount if I buy life insurance today or later?
Insurance is an immediate need of everyone; therefore, never add later to it. However, discount word knocks everyone’s mind. You can ask your agent if there is any discount if you buy it today. Many agents offer discounts if customers show interest in buying but seek discounts. You can also check on internet to get more discounts because people get huge discounts through e-shopping.
Note: Discounts are applicable on first premium only.