Wealthy Wednesdays: Insurance tips to remember

Insurance is the subject matter of solicitation. This means you as a customer make an offer that, in lieu of a premium payment, the life insurance company shall upon an occurrence of a contingency (death, disability, or an accident) linked with your life, secure the financial needs for your family by paying them the amount assured.

On the onset of any of the above said mishaps, it's important that you know how to make the best out of your life insurance policy. For this you need to:

Understand your needs and get the right advice
The uncertainties of life, death, sickness and old age support cannot be left unattended or uncovered. Financial security and protection are sacrosanct under any situation–unexpected emergencies, demise or living for too long. Therefore it is imperative that you recognise the risks in your life and take appropriate measures.

Having recognised the risks, spend some time understanding your needs. In order to do this, make an assessment of your income flow, your expenditure, your present and future obligations vis-a-vis your lifestyle. Once that is done, consult an insurance advisor, a person whom you can trust and who can offer you honest advice.

Be candid with your insurance advisor
Be candid with your insurance advisor about your risks, your needs, your financial assessment and your aspirations. Evaluate product options and features, and ensure that your needs are met from his/ her propositions. Get a full understanding on premium terms and the cycle of premium payments, availability of guarantee of return, lock in period, implications of premium default etc. Compare a number of policies before narrowing down on one, since it will help you get the best deal.

Read, understand and check the details
Understand the benefits illustrated in case of a term cum savings product, where attention should be paid on deductions and the value allocated to the fund. Do not buy an insurance product to oblige a relative or a friend. Learn to say 'no' if you are not convinced.

Never sign a blank proposal form. Provide honest and correct disclosure in the proposal form and do not hide or distort your medical history. Wrong statements or information would defeat the whole purpose of seeking an insurance cover as it can lead to non-payment of insurance claim by the insurance company to your family.

Do not ask for a rebate from your agent. This is prohibited.

In case of medical complications an insurance company may make a counter offer to provide you insurance with higher premium. This should ring alarm bells, since this means that the doctors and underwriters think your medical condition puts your health in a higher risk category. Hence, think carefully before you reject the counter offer.

Carefully read and check your details in the policy and pay special attention to the details of your name, age, contact, nominee, plan name, policy term, premium amount, premium paying term, premium due dates etc. The policy document set also contains a copy of the proposer form submitted by you, so don't forget to check it. Rectify any errors in the details of your policy documents, immediately.

Insurance is a long term contract and its fulfilment is in the future. In all probability you might not be around to pass on the benefits of the claim, therefore it is essential to inform your nominee as well as your family members about your plans in case of a misfortune or a catastrophe.

Ensure that you pay your premium regularly
Remember and ensure that you pay your premium regularly to keep your insurance contract in force.
You have a right of "free look" period of 15 days from the date of receipt of your policy during which, you can cancel your insurance contract if you are not satisfied with its terms and conditions and ask for refund of the premium. This is the opportunity to walk out of the insurance contract if you have been mislead by a policy.

Insurance is a well regulated industry and IRDA has taken several steps to protect the rights of insurance customers. There is no reason to shy away from buying insurance. What is important though is to make an informed decision.