Step by Step Guide to Buying Life Insurance in India
Opting for a life insurance is like buying peace of mind and security for your loved ones and yourself. It is like a contract that is built between you and your insurance provider in which you pay a fixed sum of money to the insurance firm and they provide you with the benefits upon your uncertain and unfortunate demise. Life Insurance comes handy especially when you are the sole bread earner of the family and you have dependents that will have to face a lot of financial trouble along with the emotional turmoil after you.
However, buying a life insurance policy for you is indeed a decision that should not be taken in haste. The financial security of your loved ones and your hard earned money is at stake. You need to choose wisely a life insurance policy that covers all your financial requirements without keeping you under-insured or making you over-insured. Now, in case if you feel you are in need of a life insurance policy you may consider following steps that may guide you while you go for buying life insurance.
How to Select & Buy Life Insurance in India
- Determine Your Future Financial Requirements – While you plan to opt for a life insurance policy it is important for you to have a clear view about all the financial requirements that your family needs to cater in the event of your sudden demise. This analysis would surely include all your debts including credit card bills, auto loans, mortgages, monthly expenses of your family, children’s higher education, sister’s wedding etc. You also need to keep inflation in account while you go ahead with this calculation.
- Choose the Kind of Insurance Plan That Meets Your Requirements – After you have analyzed your future financial requirements, you need to decide upon the kind of plan that would meet these financial requirements. You may chose from whole life insurance, term insurance, level term insurance, annual term insurance, universal life insurance, variable life insurance, variable universal life insurance, limited pay insurance and endowment insurance as per your requirements.
- List Out the Company that Suits You Best – Once you have answered how much insurance cover you need and the type of policy that would suffice your needs, you need to select a specific company of your choice. This would again require an extensive research of the products available under the flagship of several players in India and choose the one that will cater to your requirement. It maybe so that you opt out for two or three companies. There is nothing wrong with that and you may visit the websites and gather information - comparing the products with each other and then take a decision.
- Study the Insurance Cost and Term – Now you need to make enquires about the insurance cost and the term of the policy. For this you need to visit the websites of the companies you have selected and read about the policies. Compare the policies of different companies. Analyze the term you require keeping in mind your age and working years that you have in hand before your retirement. Accordingly, settle down with the policy that serves you well.
- Formalities and Documentation – In this tech-savy scenario you can buy policies online. So you have that option of buying your policy online if you are comfortable with internet or else you may call an agent. Agents may try to lure you by offering other policies in place of the one you have chosen but always remember that it is good to listen to all but right to follow your mind and heart. Ask for the formalities and documents which would be required when you opt for the policy. Generally your ID proof, Address Proof, Pan Card, Photograph and 3 years IT return is all what is called for. Documents may vary from company to company.
- Form Filling Process – It is advisable to fill the form in your own hand writing. You know your credentials better then the agent so do it yourself. Make sure you go through the fine prints of the application form and raise questions if you are not able to understand something. An agent may find that you are not eligible for the policy that you have asked for, but in order to safeguard his commission or meet his targets he cannot lose you, so he may try to hunt for short cuts or fill in details that do not fit you. So beware!
- Give Out Correct and Accurate Details – While you fill the form, make sure you give out correct and accurate details not only of yourself but also of the beneficiary or the nominee as the case maybe. You would surely not want your family to get caught in trouble while they seek the claim. Your effort would be ruined. So make sure whatever you fill out in each line is correct and accurate. For example, if you name is Krishna Kant Ramaiya do not put it as Krishna K Ramaiya. One thing more that needs to be taken care of is that you go for your medical test and also provide correct details about your height, weight, any hereditary illness, the amount of alcohol and cigarettes you consume, any track of any aliment in past need to be given.
- Be Honest – Make sure that you give out all your details and tell everything about yourself honestly including your past medical history and all other relevant details. This is important because when your family will claim money, it will trigger some kind of investigation. If something vital that was hidden gets revealed at the time of investigation there are fair chances that your family’s claim would be dishonored. Of course, you would not want that.
- Provide a Nominee – This is one thing that is quite important but many of us take it lightly. While you opt for a policy you should make sure you have decided on the name of the nominee. However, the name of nominee should be provided at every place that has your money invested or kept be it bank accounts, mutual funds, fixed deposits, lockers etc.
- Check the Application Form and Run Through the Form Details – Once you are done with it, cross-check the application form, study the details mentioned on the form carefully, go through the documents that you have provided and also check your signatures wherever required. In some cases you are required to attest your photograph by signing across it and photocopies of the documents that you are providing should also bear your signatures.
- There is no Haste – Take your time. The policy won’t run away and you have time in your hand to study every minute detail possible and be rest assured. It is a matter that involves your hard earned money and you are about to buy peace for your loved ones which is yet another crucial topic so take is easy, relax, assure yourself before getting insured.
Contributed By: Megha Sharma
Megha Sharma works as a guest lecturer in Delhi. She holds an MBA & Doctorate from the UPTU. With extensive knowledge and experience in various financial products, she also works as a consultant in banking & finance domains wherein she offers advice to her clients in managing personal finance.