Choose Insurance Wisely for Long Term Security!!

Arjuna (Fictional Character): Krishna, it is general elections period in our country and you can already see the rallies, the conferences and the promotions on a great scale all around the country. Just as electing the right candidate is important for the growth and security of the nation, choosing the right insurance policy is also equally tough and important job. What are your view on this?

Krishna (Fictional Character): Arjuna, India is known as the ‘Mother of Democracy’ and as the elections takes place once in five years, you are bound to see these events taking place on the biggest scale. Just as you are made to choose the right candidate in elections to be assured for long term, you shall also choose the right Insurance considering your age, financial need among other important factors for yourself and also for your family. However only approx. 65 percent of eligible voters vote in elections and similarly only approx. 30 percent of Indians have life insurance.

Arjuna (Fictional Character): Krishna, what things should the insurer(voter) keep in mind in choosing(electing) the right insurance policy(candidate)?

Krishna (Fictional Character): Arjuna, Just as not voting can put you at risk of being vulnerable to unpredictable and unwanted results, similarly not getting insured can put you at even greater risk of being exposed to unpredictability the life brings. Not getting a insurance is the biggest mistake one can make as insurance protects you and your family financially in unforeseen and unfortunate circumstances.

One shall keep the following things in mind while choosing insurance:

• Identify your Goal: Different Insurance policies are structured for different goals. Life Coverage, Money-Back, and Tax Saving are few benefits different insurance policies provide. You must identify your goal and then choose the insurance policy. One shall also consider health insurance as an important way of safeguarding oneself.
• Know Your Insurer: We have all heard about KYC(Know Your Customer) but have we ever taken steps to know our insurer. We shall make proper assessment of the Insurer just as we do for election candidates, like the insurer's track record, claim settlement ratio, and customer reviews.
• Review the Policy: Just as one shall review the work done by the elected candidate in the tenure and changing needs, one shall also review their insurance policy regularly amid change in family structure and premium paying capabilities.
• Premium Paying Capacity: One should always compare the premiums required under different policies and select the best policy which also does not heavily affects ones pocket. Many people prematurely terminates the policies due to high premiums however premature termination of insurance contracts can lead to significant loss to the insured.
• Low Coverage: Many Workplaces provide insurance facilities to their employees as part of job contract, and the employees don’t always make clear enquiries about the coverage of this policies. This can be dangerous in unforeseen events and one should always satisfy himself about the coverage his policy will provide and if the same is sufficient considering the family structure.
• Consult Insurance Advisor: It is always advisable to consult an insurance advisor who can provide you with complete insights of all policies and can properly guide you in the selection of policy.
• Start Early: Getting Insurance Policy as early age can be financially beneficial as premiums are lower when you start early.

Arjuna (Fictional Character): Krishna, How can one make decision regarding selection of Insurance Plan?

Krishna (Fictional Character): Arjuna, many insurance policies not only pays-back the premium paid by the insured but also a bonus on the amount after a fixed term. However, the premium to these polices are high as compared to that of term insurance policies. For example, if the sum assured is at Rs. 50 Lakhs, then for the money back polices the annual premium would be around Rs. 2.5 to 3 Lakhs, whereas for Term insurance it would be around 20,000. However, the term insurance policies does not repay the premium back. One can choose the Term Insurance policy and invest the balance amount i.e. 2,80,000/- in mutual funds which gives higher return when compare with insurance policy. This way you can get the benefit of bigger coverage along with high returns on investment.

Arjuna (Fictional Character): Krishna, What should one learn from this?

Krishna (Fictional Character): Arjuna, Selecting the right insurance policies from a number of insurance policies by comparing the premiums, coverage and ultimate benefits the policy is a tough but significant task. However not getting insured at all is a bigger mistake then not been able to choose the perfect insurance. We all talk about how electing the wrong candidate can hurt ourself in the long term and I feel we should give the same level of thought towards the selection of Insurance Policy. In the end don’t forget to get yourself insured and also don’t forget to vote for safeguarding the future of you and your loved ones.