The Insurance Regulatory and Development Authority is the organization that oversees all the operations related to insurance in the country. Hence, if you need any information from an authentic and reliable source, you can refer to the various mediums of the IRDA. That being said, the IRDA states that there are 24 companies registered in the country to sell life insurance. The first thought that would come to your mind after hearing this is that you have no shortage of options. However, there is immense competition between all these companies.
When you decide to buy life insurance, you essentially put the financial future of your family in the hands of the insurance provider. In the case of your death, they will have to depend on the insurance company for their financial security. Hence, it is important to make sure that your insurance provider delivers on the claims that they make in its marketing. The best way to do that is to ask your insurance providers the right questions before buying a policy from them. Here are a few questions that you should ask:
What types of life insurance do you offer?
If you are new to the world of life insurance, you may be surprised to know there are various types of life insurance policies. Each of these types has unique features that serve different kinds of policy buyers. All of these types can be classified into two broad categories. These two categories are life insurance plans that offer pure financial protection and plans that offer coverage with additional benefits of saving and investment. For example, a term insurance policy only offers pure life coverage, but ULIPs offer the benefit of investment as well.
You should inquire the insurance provider about the benefits that each of their plans offers. Moreover, you should ask what makes their offering of a particular plan better than their competitors. In the end, you should get information on what types of coverage their plan includes and what it does not.
What is the amount of coverage offered?
The main reason that you buy life insurance is that your family can receive a large sum of money in the event of your death. This large sum of money is known as sum assured or cover amount. It is the key factor that decides whether a policy is suitable for you or not. Hence, it is important to inquire the insurance provider of the sum assured they are willing to offer.
Meanwhile, you should also have an idea of what the cover amount should be as per your preference. Ultimately, this is the money that will ensure that your family has no financial troubles in your absence. Hence, you should have an idea of your family’s financial requirements for the future. You can start by taking stock of your present income and expenses. Include your assets and liabilities into your calculations. Finally account for your financial goals and inflation and you should have a close figure of how much your cover amount should be. To make things easier, you can remember this rule of selecting the sum assured. It should be at least 10 times higher than the total premium you would pay for the policy.
How much will I have to pay?
The unique selling point of insurance is spending less to have more. Hence, after you make sure that your cover amount is enough, you need to ensure that your premium is affordable. Moreover, the premium is not the only money you would have to pay to buy life insurance. For different life insurance policies like ULIPs, term plan, endowment plans, etc., there are different sets of extra charges that must be paid while buying the plans. Make sure that you know about every charge that is involved in the process before you make the purchase.
Buying life insurance is very much like opening doors. You may have all the keys, but you have to use the right ones on the right locks. This means that do not just believe the claims of the insurance company blindly. Ask the right questions to make sure that you get the right product.