AFFORDABILITY
Even in life insurance, there are multiple options available such as Endowment plans, Whole life plans, Money back plans, and term plans (Pure Insurance). The pros and cons of each plan are different. Term plans provide huge cover in case of untimely death but on the flip side, they do not provide any maturity benefit or whole life coverage.
Also, the affordability of the insurance policy helps to hold onto it till the time of maturity. It is the general tendency of people to stop paying insurance premiums in times of difficulty. As per a report of IRDA, In the case of the Life insurance corporation of India (LIC), around 37 percent to customers stop paying premium after the first year.
So, one should always buy a policy, the premium for which could be paid on a long-term basis.
SURVIVAL BENEFITS
Many Insurance companies provide various additional benefits to their policyholders. Such benefits include protection against chronic diseases. For example, LIC’s Jeevan Shiromani policy not only provides high sum assured on death but also has an in-built rider for 15 critical illnesses. So, this must be considered before buying life insurance.
AUTOMATIC PREMIUM PAYMENTS
Now customers need not worry about remembering the due date of premium payment. One can avail of the service of Instapay and regulate its future premium payment up to the amount of Rs.50000. So, availing this service is a must as it will ensure that you never miss out on premium payment and reduces the chances of policy lapse.
Follow these steps to avail automatic payment facility
- Log in to your bank’s website and select “Pay Bills”
- Now select Insurance
- Now click on the name of your Policy provider. (Example- LIC)
- Click on Autopay
CLAIM SETTLEMENT RATIO
It refers to the percentage of claims settled by the issuer out to the total claims received. One must only trust the Insurance companies with a high claim settlement ratio. For example- LIC offers a 98% claim settlement.
PREMIUM PAYING TERM
It is the total number of years for which a company has to pay a premium. It should not be confused with maturity term as it can be equal to or less than the maturity term. Example- In LIC’s Jeevan Labh Plan Policy, the Maturity term is 16/21/25 years whereas the premium paying term is 10/15/16 years respectively.
Consider the above principles before buying Life Insurance
Written by- Yogesh Bansal
Great Lakes Institute of Management
