Before you buy a life insurance policy

Life insurance is the only financial tool which offers the triple advantage of risk coverage, long term savings and tax benefit. It offers financial protection to an individual after taking into account the present and future value of his assets and liabilities. Even as the awareness and acceptance of insurance in India is growing, consumers need to develop a better understanding of the products they buy.

A life insurance policy should spell out terms clearly, and the insurance document is a complete guide to what the insurance contract covers. Therefore, one should make sure that everything that one requested in the policy be incorporated in writing.

There are ten items to be checked and understood, once the policy document is received. Let us examine them:

Verify personal details

Personal data provided to the insurance company is the basis for settlement of all claims. One needs to verify that personal details such as name, age, etc. are mentioned correctly. Further, one needs to check that all aspects related to personal habits or health details are mentioned correctly and honestly. In cases where it is not declared or is erroneous on policy documents, the insurer in all fairness may refuse to honour the claim. Hence it is necessary to get it corrected proactively.

Analyse the benefits

The benefits of your life insurance policy must correspond with your long term goals. After the receipt of policy documents, go through the features of the product and check if they match with promises made during the purchase. Cross-check features such as sum assured, premium amount, flexibility of the plan, etc. Your insurance plan may also come with more evolved features such as dynamic fund allocation or increasing premium to beat inflation which need to be understood in detail as well.

Check the riders

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