In the current scenario, buying life insurance has become a must for every earning person. But it is important to consider this aspect when and how much insurance a person has to buy. Understand your needs before purchasing insurance. Only after this take a final decision. Term insurance is the best option for future financial security. Whatever insurance you are purchasing, understand the company's secrets thoroughly.
After the entry of private companies in the insurance sector of the country, this industry is growing rapidly. Due to increasing unemployment, every year a large number of youth are joining it as agents. Due to increasing competition among companies and pressure on agents to meet targets, a lot of miss selling is happening. People are also being sold such policies which are of no use to them. Although Insurance IRDA has taken many measures to curb mis-selling, insurance companies have circumvented all of them. When a person buys a policy, it is not easy to understand the intricacies of the proposal form. In such a situation, people just trust the agent and sign the application form. By the time they realize their mistake it is too late. In such a situation, it is important to understand the secrets of the companies before taking any insurance. For this, read the terms and conditions given in the proposal form carefully. If you don't understand anything, seek expert advice. You can clear your doubts regarding this through internet also.
Don't fall prey to greed
Insurance companies are adopting all kinds of tactics to expand their business. Call centers are being used to sell insurance policies. Once a person shows interest, every effort is made to give him the policy. Even if he has to bluff. Apart from this, a large number of DCAs make huge claims of returns on insurance investments through phone. Innocent people are being trapped in the web of statistics. A few years ago, people were trapped in the name of ULIP and they have not been able to recover from it till now. Understand very well that life insurance is not for investment. This is just for future financial security. Depending on your risk tolerance, you can invest in small savings schemes and mutual funds. Understand well that most of the claims of high returns in insurance are fake.
understand your needs
Before taking any insurance, understand well what your need is and whether the insurance you are taking will be able to fulfill it. If you consult an agent, he will only tell you about ULIP or endowment plans. If you have to take insurance to cover financial risk then term insurance is the best option. But the insurance agent will never tell you to take this plan because it does not earn money in comparison to ULIP and endowment plans. Secondly, the premium for term insurance is very low. For example, if a 30 year old person takes an insurance cover of Rs 50 lakh, he will easily get it at an annual premium of Rs 8,000. This much cover in an endowment plan may not be available even in a premium of Rs 1 lakh. In such a situation, if you want to take insurance cover only then you should choose the option of term plan only. It proves to be quite economical compared to normal insurance.
examine the data
Before taking an insurance policy, we should consider the claim settlement ratio (CSR) of the company. In simple words, out of all the claims received by the company, how many were paid. For example, if the company received 100 claims and paid 95, then it can be considered a good performance. Obviously the company rejects five percent of the claims. In this way the claim rejection ratio of the company is five percent. If we talk about statistics, another important aspect is the Amount Settlement Ratio i.e. ASR. Generally, insurance companies show good CSR but their ASR is very low. If we understand in simple words, if the amount of 10 insurance claims is Rs 20 lakh. If the company approves eight claims worth Rs 10 lakh and rejects two claims worth Rs 10 lakh, then in this situation its ASR will be 50 percent. Usually, insurance companies make statistics about this, the reality of which is not within everyone's power to understand. To get to the bottom of this, insurance regulator IRDAI can take help of its website. Here you will get complete details of claim settlement and cancellation of all the companies. You can have full confidence in these figures. The lower the claim rejection ratio, the better the company is considered.
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