You must have read a number of times that it’s best to buy a term-insurance policy early in life to avail of cheaper premium rates.
However, cheaper rates should not drive your decision to choose a particular policy as you may not always get the best deal.
The primary reason for buying a term cover should be to take adequate insurance, which should be done through a reliable company.
Term insurance is a pure risk cover taken for a specific period of time. It pays benefits to the nominees of the insured only if the insured dies within that specific period.
For individuals who are financially independent with no liabilities, a cover at least 10 times of their annual income could be adequate. But with increasing obligations and assets, he needs to analyse and accordingly take a cover.
Buying it online:
Buying an insurance policy is definitely cheaper as the agent commissions and distribution costs are almost negligible.
However, if a person buys a product online, it’s his responsibility to initiate the entire process and see that claim settlement is not too tedious for his family on his death. Because on settling the claim, there is no intermediary between the insured and the company, which one may find difficult to track.
On the other hand, the agent is usually very alert and keeps a track of the slightest change that is required in the policy.
Since insurance is a push-product, unless an agent explains the product in depth, it is never bought by the customer. Policy servicing and claim settlement are also better managed by an agent, who updates your policy regularly.
Also Read : LIC’s Term Plan
Some people don’t mind paying the agent commissions as long as their policy is getting regularly serviced, rather than getting their policy lapsed for such minor reasons.
Also the paperwork is not reduced as you are still expected to submit the required documents Insurance companies usually send their agents to collect the documents, but not all may provide an agent who could assist you for your medical tests.
Death claim repudiation ratio:
One can get this information on the Insurance Regulatory & Development Authority website. The denial claim ratio tells us the percentage of claims settled by a company. But one cannot take a negative view about companies based on the ratio. At times, it’s also the customer who does not disclose all the information related to his ailments to avoid higher premiums. In such cases, the company may refuse to pay claims on death for not disclosing information about his health.
Insurance should be bought from a company which has a good brand name and reputation.
For example, LIC’s term plan might look very expensive but it holds a very good claims denial ratio, which should be of utmost importance to the buyer.