a complex product - this is perception of insurance illiterates. But, a little
study about insurance products will help you overcome this perception. Still
some health insurance products are complex due to long list of terms and conditions.
Investment products are as simple as banking products, adding insurance part to
an ocean, which takes different rivers into it. Insurance had different type of
products based on customer’s requirement.
products are term insurance and investment products (tax saving).
Here are the things to be checked for term plan:
1. Insurance Company vintage
insurance market was opened for private players only in the year 2001. The
first private player in insurance was HDFC Life. The companies which had
survived for longer period have obviously performed well. So, choosing an older
company will give heads up due to wider network and better service.
2. Settlement ratio
This is the most crucial point to be noted to make a purchase decision.
Settlement ratio defines the no. of death claims successfully settled by the
insurance company out of 100 claims. HDFC has 96% of claim settlement ratio,
which is the top most in private segment and Aegon life has 95%, which means
out of 100 claims due to death, HDFC have made payments for 96 and Aegon life
has made payments for 95 people respectively. It is advised to choose companies
which has minimum 94% settlement ratio.
3. Premium rate
Premium rate is to be considered after taking features into account. If two or
more products are matching our requirements, then premium rates should be given
preference. Some insurers provide multiple payment modes, this will help in
refining out insurance company.
4. Settlement time
This is not specifically mentioned by any insurance company. This needs to be understood
by speaking with agents and existing customers of the respective insurers. This
will hold the key, as death of a policyholder will lead to a financial distress
which needs lump sum to clear out the issue. If the settlement is faster,
things can be sorted out immediately. But, if the settlement is late, chances
of a family suffering financially are high.
forward signing up with websites without reading terms and conditions.
Purchasing Insurance needs attention. Terms and conditions needs to be read
carefully or should be clarified by agents in detail. Exclusions will puzzle
you during the claims, if this exercise was not carried out while purchasing
6. Channel of purchase
Many won’t consider this as a crucial part for purchase decision. But, this will
make a huge difference in case of service request. Insurance purchased from a
bad agent or wrong channel will start effecting when you need any change in
payment mode, address change and nominee change. Insurance should be purchased
only from a channel which ensures 100% customer support throughout your policy
term with a clause “no questions asked”.