General population has a wrong perception about insurance.
This wrong perception is – NOT to take an insurance policy until something
seems life threatening. Insurance is a product which is sold mostly on word of
mouth rather than expensive marketing. The benefits of an insurance product
will be invisible till some mishap occurs. So, marketing would not create a
compulsion to buy an insurance product. But the reference from relatives or
friends will have a major impact on the purchase decision. This will lead to
enquiry of products, but the inclination will be towards the product purchased by the friend or relative. This inclination will lead to purchase of a wrong
insurance product, as the person ignores his requirements and go with a wrong
the right purchase of insurance products, a better study of insurance products
available in the market based on our requirements is a must. But with 54 life
and non-life insurance companies available in India with 1000+ products, this
decision making will be tedious and tiresome. The friend or relative who had
referred you will be helping you handy in this situation. Contacting the
insurance agent and explaining your requirements will boil down your decision
to a specific insurance product. The segment indicated by the insurers like
Investment, Children, Pension or Term insurance should be enquired in multiple
companies. This might be time consuming but not an indefinite task and the
result is worth the effort.
Linked Insurance Products) are new breed of insurance products, which combine
investment objective and insurance for high risk profile customers. Initially,
customers will face issues in understanding these products, as it is a typical
financial product. This is a mutual fund which gives an option of equity, debts
in which a minimum of 1/8th of the premium needs to be invested.
This investment decision of proportioning into equity, debt or balanced funds
has to be decided by the customers. Fund managers will be available with all
ULIP sellers to help the customer in making these decision. Customers will feel
this investigation as time expensive. But the returns from most of the ULIPs
are worth the time spent.