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What you should ask before buying an insurance policy

INSURANCE is a subject matter of solicitation. But how often do you give any thought to this rider, which perhaps is the most important clause while buying a policy. Traditionally, in India, people buy insurance products not because they need them, but because they are goaded to buy a policy to appease a neighbour, relative or a friend who is also an insurance agent. Financial experts hold the view that insurance needs are specific to each individual, depending on their financial objectives. The product that you buy should be in line with your requirements. Here are the pertinent queries that you should ask your insurance agent before being sold an insurance policy.



Is the agent qualified or authorised to suggest me a financial solution?



As a first step, you should ask your insurance advisor to provide the agent licence number and details such as when was it issued and its expiry date. This will inform you for how many years he has been in this profession. Also, whether he is a full-time or a part-time agent. It’s important to keep a record of contact details of the reporting manager and the branch office, which can come handy if you want to know more about the policy and even for addressing your concerns.



How can I plan my savings and understand my goals?



Financial planners say that you should ensure that the agent is a problem-solver — one who can understand and fulfil your family’s financial security and long term wealth-creation needs. If your agent does not ask probing questions and develops a financial programme, the time has come for you to look for another agent. Asking such probing questions will help you better understand the reason why you’re buying a policy and whether it’s for savings, tax rebate, life insurance or long-term wealth creation. This will induce usage of the goal finder and help both parties. The agent will cover the entire spectrum of coverage available — spanning from traditional coverage plans to health coverage, market linked and retirement planning plans.



What is the product that will suit my needs the best and what are its features?



It is advisable for you to know the features of the proposed plan and how they satisfy your individual needs. You should ask the agent, what are his commitments — in terms of premium size, premium paying term, frequency of premium payment (monthly, half-yearly, annual) and policy term? Further, get a benefit illustration of the policy, especially in the case of a ULIP. This should show returns at 6% and 10%, maturity value and yield at maturity, surrender value and all charges.



What differentiates the product?



Analysts say that you should compare the agent’s offering with other products. This will act as a check on his industry knowledge and product awareness.
Insurance companies are known to offer a wide range of products. The advisor should be informed about the competitors’ products so as to provide unbiased and meaningful recommendations, regardless of how much the agent stands to gain by way of agency commissions. It is recommended that you should check the flexibility offered by the product riders as they come at a comparatively low cost while enhancing the cover of the insurance plan.



How to cancel a policy and where to lodge a complaint?



All life insurance companies give a free-look period of 15 days during which you can review the policy. If you’re not satisfied and feel that the product features are not in sync with the understanding given by the agent at the time of selling the policy, then you’re free to return the policy and claim a refund of the money paid. You should ask questions such as whether the policy has been submitted, status of money receipt and the address of the complaint redressal officer. This will check that the agents are not mis-selling the products.

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