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Things to be noted before buying Insurance

Insurance is 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 it.

Insurance is an ocean, which takes different rivers into it. Insurance had different type of products based on customer’s requirement.

Most sold products are term insurance and investment products (tax saving).

Here are the things to be checked for term plan:
1. Insurance Company vintage

The 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.


5. Exclusions

Customers go 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 the policy.


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”. 



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