Expert talk: 10 things to look for in insurance

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. However, while the awareness and acceptance of insurance in India is growing, consumers need to develop a better understanding of the products they buy. There are a number of things that each of your life insurance policies should spell out. Here are 10 key points.

1. Verify personal details

Personal data provided to the insurance company forms a very important part for settlement of all claims. Please make sure that all personal details and habits are mentioned correctly. If there are any mistakes, the insurer in all fairness may refuse to honour the claim.

2. Analyse the benefits

The benefits of your life insurance policy must correspond with your long-term goals. Go through the features of the product in the policy document and check if they match with the pro-mises made. Check for features such as increasing premium to beat inflation.

3. Check the riders

In addition to life coverage, you may have purchased a few add-on covers known as riders for other types of contingencies. Go through the policy document to ensure that riders you have bought are included in it. You would not want to be disappointed while filing a claim for a critical illness if it is available in the policy.

4. Consider the payment tenure

Knowing the exact payment tenure will help in achieving your goals. Please check for how long you need to pay premiums and also what mode of payment you may have chosen. The basis of most mis-selling is the premium payment tenure. So don’t fall for the “you need to pay for only 3/5 years” line.

5. Authenticate the returns

Do not believe the returns promised. Once you get the policy documents, check out the benefit illustrations of returns. Study what is guaranteed. In the last dec-ade, the gross yield of the endowment plans was eight per cent and Ulips 12 per cent.

6. Comb through the service contract

In addition to the benefits specified in policy documents, it is necessary to carefully read the terms and conditions of the service contract. In case you find any difficulty in understanding any aspect, you may want to check with the insurer the impact of those terms.

7. Confirm surrender charges

Many times, a situation may arise where you face a cash crunch and need to surrender your policy or make partial withdrawals. For times like these, you may need to make sure to examine the exact surrender charges mentioned in the documents, so that you can plan finances and minimise losses accordingly.

8. Examine exclusions

Exclusions in the policy define aspects or situations that will not be included in the coverage. An exclusion that one is not aware of can make the cover redundant. Read the exclusions carefully, and they may include suicide,  or acts of war or terrorism, and others.

9. know Claims settlement process

Check if the nominee’s details are captured properly. Your life insurance policies should include everything that is supposed to be in your coverage, and it will spell out exactly what your responsibilities are, what the life insurance company is responsible for.

10. If you think product has been mis-sold

Life insurers give a free look-in period of 15 days to the consumer during which he or she can review the policy from the needs perspective. If the consumer is not satisfied, he or she is free to return the policy and claim a refund of the money paid.

The writer is the managing director and CEO of Max Life Insurance