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When looking out for a life insurance policy, there ought to be a lot of questions in your mind. Life insurance in an investment in the future of your family, and it should be bought with utmost carefulness and after complete research. Do not hold back your questions and clear all your doubts before you start paying your insurance premiums.
Just like when you buy an appliance, it is advised that you evaluate the product thoroughly and enquire about the manufacturer on all the necessary parameters. Do not refrain from asking questions about your life insurance policy, to start with, you can ask the following questions to your life insurance agent for your own satisfaction.
But, before you start –
There’s another question you need to ask, that is if your insurance advisor is qualified and authorized to suggest life insurance solutions. As a first step, ask your insurance agent to provide their Insurance Agent License Number and when was it issued. This will give you an idea of the agent’s experience in offering life insurance solutions.
Also, as a precautionary measure, you should save their contact details, and of their manager’s along with the branch office out of which the insurance agent operates.
Question 1 - How good is the insurance company?
The answer to this question is of great importance for you as the person investing in a policy. In fact, it is the brand value of the organization that helps take the first step for building trust. Ask the agent likely appointed by the company to share details about its background, how long has it been functioning, its financial condition, what is the company’s claim settlement ratio, what is its presence and reach, etc.
Claim Settlement Ratio is the number of claims passed by an insurance company in a year’s time. Sometimes also referred to as the Claims Paid Ratio, it helps determine if the insurance provider is reliable. One must always consider checking the claim ratio of a company before buying a life insurance or any kind of insurance plan such as health, savings or ULIPs.
Question 2 - What are the guarantees under the policy?
Ask your insurance agent details about the policy and the benefit guarantees given by the company. Ensure that those benefits are somewhere in writing, or a part of the policy document that will be provided to you. For most life insurance policies, the foremost guarantee is that of a death benefit. Confirm and be sure of the amount your family will receive in case of an unfortunate eventuality, and the conditions that pertain to it.
Some other life insurance plans may also offer a maturity benefit that offers a definite sum to you when the tenure of the policy is complete. However, the perquisite of claiming a maturity amount is that all premiums be payed in time and completion of the terms under the policy contract.
Question 3 - What are the benefits of your policy?
While one of the first things an agent is supposed to do, is read out the benefit illustration of the policy selected by you. However, during the buying process of the policy, you must ask multiple questions about the benefits of a particular feature of the policy, the plan options and any additional riders offered with it.
You may want to start with questions like what is the best plan for you basis your current life style and income? How much cover will be enough for you or what will be the amount paid to your family in your absence? Moving on, you should also clear facts about the most preferred plan type, any riders that may help you enhance your cover and their benefits in the long and short term.
Question 4 - What is the premium amount?
In definition, insurance premium refers to a specific amount to be paid periodically by the insured individual to maintain their insurance coverage, as calculated by the insurance company. It is important that you know what your premium amount is and if there are any additional charges you may have to pay. Another important factor worth considering is the premium payment term or the duration for which you will have to pay the premiums.
There are insurance plans that may cause your premiums to increase/ decrease over time, therefore it is important that you are prepared and informed about this change in premium. Premium is the most important component of your insurance policy and determines the benefits you receive, therefore remember to make a note of all the premium related options you choose and features that come along with your selected plan.
What happens if you can’t pay the premium?
If you are buying an insurance policy you should be well aware of the unforeseen events that might affect the policy’s term and conditions. Owing to the fact that life insurance is a long term commitment, one of the major concerns people tend to have that they might not be able to pay the premiums for a long time. It is recommended that you ask your agent for all the premium payment options available, and choose the one that suits you the most; for instance, if you wish to make a one-time, monthly, yearly or quarterly payments against your policy.
In addition, ask your agent about the grace period offered, if there’s a revival period and what happens if you cannot pay your due premiums in case of a major financial crisis? Will the policy lapse? If yes, will you be able to revive the policy after sometime? Further, you should also know the process of surrendering your policy, god forbid, if you ever need to.
Question 6 - How can your family members get the claim amount?
A hassle-free claim settlement process is among the top factors to help you decide the reliability of an insurance company. The key purpose of buying an insurance policy is to ensure for your loved receive the assured sum in a hassle-free manner. Enquire about the turnaround time taken by the company to payout death claims to the nominees. Is there anything apart from the promised amount that your family will receive? How will they get the benefits?
Apart from these, there is an important question you must ask and be sure of, that is what happens if your nominee is absent at the time of claim dispersal, will the benefit amount go to your remaining family members?
The right advice makes all the difference
Buying Life insurance is one of the major decisions you will ever make in life. These are only a few important questions you should get answered by your insurance agent. The answers to these are important to ensure the financial security of your loved ones. To avoid any claim rejections, you must follow and understand the complete process before actually jumping in to buy the policy. While there may be several people advising you on different topics, a certified insurance agent is the right person when it comes to enquiring about your insurance policy.
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