February 18, 2010 by akhilendra

Shop intelligently for Insurance

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Sale season is on in India. Discounts always attract customers, getting something in less than its actual price always does the trick. Life insurance should not be the exception but we hardly get any Life insurance sale. With the growing number of life insurers in the market, competition has increased and resulted in more number of options for investors. But cracking a better deal in life insurance is not always the prime factor while doing a purchase.

Now, market equations have changed, insurers are coming up with newer products and premiums have gone down. So, this year before buying a Life Insurance Policy, shop around and look for the best value of your money i.e. maximum face amount per thousand and lowest charges. There are several websites and magazines available to give you an idea about charges and offered schemes from various insurance companies.

Few things to consider;

• Yearly mode of payment– Due to additional processing charges, companies charge more for monthly, quarterly and half yearly mode of payment than yearly mode.
• Stay healthy– live a healthy life because companies charge extra mortality charges for medically substandard lives.
• Don’t opt for additional benefits– Don’t opt for additional benefits like unnecessary riders.
• Go through fine prints– read the fine prints carefully and go through all charges.
• Go for bigger face amount– opt for higher sum assured
• Take cover upto maximum age– try to take cover upto maximum age.
• Go for good and reliable agents.
• Systematic Investment- systematic investment is good for ULIPs than lump sum investment. Gather thorough information about investment risk, product cost and invest for long term in ULIPs.
• Bonus rates- look at bonus rates in endowment policies.

Few threats to consider;

Commission effect- agent’s fees and commissions are deducted from your premium. Insurance companies offer higher commission on those products which they want to push, so, insurance agents may try to sell you some product which may not suite your needs. Before buying any products, carefully study it and make sure that its fits in your need and financial goals.

Market hiccups- ULIPs are market linked and ups and down in stock market will affect your fund value, so take a right mix of various funds available based upon the term of your product. ULIPs are long term insurance products and are not good short term goals. In long term, start with more or all part of premium going to equity market and as your policy approaches maturity, shift in phases to more secure funds.

Five must have

1. Term Insurance
2. Health Insurance
3. Accident Insurance
4. Household Insurance
5. Home loan Insurance

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