Life insurance is a contract between the insurer and the insured. As the insured, you will pay a premium to procure life coverage. In exchange forthis premium, the insurer assumes the responsibility of providing the policy benefits in case any of the covered incidents occur.
Life insurance policies are an excellent way to procure the triple benefits of risk cover, tax advantages, and long-term savings. With severaltypes of life insurance plans offered by insurers, it is important to understand these in detail to make an informed decision.
A life insurance contract includes multiple clauses and it is important to review the document thoroughly to avoid any issues in the future. Here are five things you must review in the policy document before buying the same:
1. Verify all the personal details
The personal data you provide at the time of buying the life insurance policy is very important in case of a claim and for its servicing. You must ensure details such as your name, address, age, and other personal information is entered accurately.
Additionally, ensure you provide accurate and factual details about any pre-existing health conditions and personal habits to avoid rejection of your claim in the future. If you provide incorrect information in such disclosures, the insurer may refuse to pay the policy benefits in the future.
2. Analyze the benefits
The policy benefits must align with your long-term financial goals. Once you receive the policy document, it is crucial that you go through all the features and benefits of the plan. You must ensure the policy benefits are in line with what was communicated to you at the time of purchase. You must verify features such as sum assured, policy term, premium amount, and the flexibility of the policy to avoid any trouble later.
3. Check the riders
At the time of the life insurance policy review, it is important to check all details related to additional riders. Insurance companies offer several riders such as critical illness or accident cover for an extra premium. You must read the clauses related to all the chosen riders to clearly understand the coverage and all inclusions and exclusions from these.
4. Take the payment tenure into account
When you buy a life insurance plan, you need to pay a regular premium to ensure the coverage is available to you. You must check the period during which you need to pay such premium to continue receiving the coverage.Moreover, you must also check the frequency of payment chosen, which may be monthly, quarterly, half-yearly, or yearly.
Sometimes, the agents may provide you with incorrect information while selling the policy.They may tell you that you need to pay the premium only for a certain number of years. However, you must be careful of such agents because life insurance is a long-term investment tool and you maximize the benefits when you stay invested for several years.
5. Definitions
When you do a term insurance plan review or a life insurance plan review, you need to read all the definitions and understand their meanings. You must understand terms such as sum assured, limits, and price and value, to ensure there is no confusion later.
Life insurance coverage is important for your financial stability. However, before making the purchase decision, reviewing the policy document in detail will prevent any confusion in
the future.
