Sunday, May 13, 2012

What you need to take care of while buying insurance?

Insurance as they say is the protection (to a some extent) from a risk which may arise due to happening of an uncertain event.  Insurance is definitely necessary as it not only protects us but also gives us an option for investments. But what points should we take care of while buying insurance?
The sum assured must be reasonable – the sum assured must be a reasonable amount and not a very high amount as you are the one who has to pay the premium and if you go for unjustified sum assured then you will be paying unreasonable premium amount every quarter, or half yearly or yearly. The sum assured should also not be very less as you should consider the value of money, inflation and various other factors while deciding on sum assured.
                      For e.g if your monthly salary is Rs. 10000 and you buy an insurance in which your quarterly payment of premium is Rs. 18000, then it means you are paying Rs. 6000 every month for premium which leaves you with just Rs. 4000 for monthly expenses which is a less amount, on the other hand you buy an insurance policy for the period of 10 years and the sum assured is just Rs. 100000 then you can imagine what is the use of this policy as after 10 years Rs. 100000 will of be very little use.
  Who is your insurance provider? This is a very important question as you should be parking your money with a company who is reliable, has a proven track record, and handles claims quickly and smoothly. In case, of Life insurance particularly, you should choose your insurance provider very carefully as if you die and then your family has to face troubles in getting the claim than what is the use of this insurance.  You are buying life insurance for your family and if they cant get the benefit than it is useless. So make sure that your insurance provider has a good track record.
Who is your insurance agent? You should be very careful while choosing your insurance agent. There are two types of insurance agent  - freelancer and Employed. The freelancer agents do have targets to fulfill but they are more concerned about their reputation and relation with the consumer and their name is their business. On the other hand, the employed insurance agents are employed with an insurance firm and paid fixed salary and incentives if they reach their targets. In comparison to freelancers the employed insurance agents are under more pressure to fulfill their targets and they can be sometimes pushy while dealing with the clients. So I always prefer a freelancer rather than employed insurance agent.
Read the document properly – nobody needs to tell you this and you should be knowing it that you should read each and every document carefully before signing it and don’t just rely on the verbal talks with your insurance agent.

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