National Insurance Awareness Day: Things to check before buying a policy
People have become more aware about insurance policies due to the pandemic. Also, in the wake of COVID-19, insurance has become an important part of everyone’s life and people have started buying more health, term insurance. Uncertain future and contingency requirements make people more cautious about insurance plans. This is the reason why digital insurance sales have increased by 100 percent this year compared to last year due to the pandemic.
“Think of insurance as a tool to manage your financial risks in the future. We are living in an era where it has become possible and easy to buy an insurance policy for your loved ones even when you are not there. Indeed Ask yourself if your aging parents, spouse, children or younger siblings depend on your income? If the answer is yes, then you definitely need insurance, as simple as that,” says bankbazaar.com CEO of Adil Shetty said.
“The pandemic has highlighted the risk and underscores the importance of risk mitigation. The insurance industry, with its focus on safety, is poised to play an integral role in building trust in the post-pandemic world. People are now aware of it. Understand the importance of insurance and the financial consequences of not having one, said Rakesh Jain, ED and CEO, Reliance General Insurance.
“With the current situation and considering the rising cost of healthcare, an optimum health insurance cover is the need of the hour. It should be noted that COVID-19 is contagious and sometimes affects multiple family members. Hence coverage of at least 10 lakh is recommended,” Ajay Shah, director and head- retail business, Care Health Insurance, said.
One must know the nuances of insurance before buying a policy. On this National Insurance Awareness Day falling on 28th June 2021 with an aim to make people more and more aware about the insurance benefits and various schemes, let us understand some essential points before buying any policy and which one should we choose for ourselves. C should take adequate plans family and properties.
1. Choosing the Right Product
Insurance policies always vary as per the needs of one person to another. Before choosing insurance policies one should always compare them and check their requirements. Do not buy any policy just because you need to save tax, or have requested to buy from an agent. Always select, research and seek expert advice before opting for any policy. If you have family and responsibilities, then term insurance is a good option to look at. So that he can help your family financially in your absence. While choosing health insurance, always go for comprehensive health plans that can cover critical illness. For motor insurance also we need comprehensive plans. Home insurance plans are also important to stay safe during any property loss and theft.
2. How to Buy an Insurance Policy
When you are ready to protect yourself, your family and your belongings with the help of an insurance policy. It is always advisable to choose the mode of purchase. It would be better if you visit the nearest branch and buy the policy as per your requirement. Due to the COVID-19 pandemic, it is better to buy the product online to save time and protect yourself. Ask an expert about the right product and compare companies’ websites before buying a policy.
3. Check Coverage, Risk and Premium
Coverage and premium are two important parts of any insurance policy. This will help you cover the liabilities and risk the right way. There are always differences in the plans of insurance companies, so take expert advice and compare the policies according to your needs. Never make the mistake of assuming that all policies offer equal benefits.
“While buying a policy, one must consider that the more popular COVID-19 based plans or similar disease-specific plans are very different from comprehensive health insurance plans. A disease specific plan provides limited coverage to that disease, whereas a comprehensive plan which covers a wide range of diseases. While choosing a comprehensive policy, one should compare different policies and assess the different features and add-ons covered,” Shah said.
Be it health, life or motor insurance plans, they all have different coverage and premium plans as per the needs of the policy buyer and the company rules.
“At a time when inflation in medical expenses is well into double digits, medical insurance ensures that no medical condition remains untreated due to paucity of funds. Medical insurance, for example, can cover the cost of weekly dialysis, diabetes injections, surgery, malfunctioning kidney or liver, dental care, eye care and many other such conditions,” Shetty said.
Check the premium discount before buying a policy that varies from company to company.
4. Verify Claim Settlement Ratio (CSR)
It is very important to fix the CSR which is the total amount claimed by the insurance company but the percentage of the claims made against the policy holder. Experts say that it is always better to buy an insurance company with a higher claim ratio.
5. Check Tax Implications and Inflation
Life insurance policies help you save your taxes under various section rules of Income Tax. It is better to check the tax benefits as per your income slab and plan before buying any insurance policy, but at the same time keep in mind the best policy.
Shah Siyad said, “Health insurance cover should not be viewed as a mere tax-saving tool as its more significant benefit lies in its ability to help protect your savings from being spent on medical bills.”
Also, it is necessary to examine the impact of inflation rates along with future family requirements while selecting insurance plans. Rising inflation matters while deciding the amount to cover your plan. So, always factor in inflation rates.
6. Additional Benefits
Most insurance companies also provide you with additional benefits. Only those add-ons and riders should be opted for if necessary to make the policy comprehensive. Otherwise there is no use for paying extra charges for add-ons.
Last but not least, never opt for new policies on the basis of price. Always check for flaws in insurance companies. Never transfer the haywire to another insurance company and sell the old one. Also, check the continuity benefits before porting any new policy. After continuation ensure that the second insurer does not treat it as a new policy and redo the formalities.
Expert advice is always important before buying any insurance policy to avoid any future chaos.
(Disclaimer: This article is for informational purposes only. Readers/Investors are advised to seek expert advice before buying a policy)
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