Deepak YohannanMyinsuranceclub.com
Shikha wants to buy life insurance, so she contacts an agent to discuss available policy options. The agent arrives, buts seems more interested in plugging a policy than in informing her about other policy options and aspects of life insurance.
He says, "Trust me, Ma’am. This will take care of all your insurance needs." So saying, he gathers his files and rushes off, probably to plug the same policy to another client.
Also read: Why you should fill out your own insurance policy form
The policy sounds like a good deal. But should Shikha purchase it right away? The answer is no. Before deciding to buy the policy, Shikha needs to ask the agent a few key questions, some of which are listed below.
Q1. Tell me about the insurance company.
Agents typically represent multiple insurance companies. So Shikha must ensure that the plan he is selling is from a credible insurer. The agent must convince her about the insurer’s claim settlement ratio, number of years in business and overall financial stability.
Q2. What are my coverage needs?
The agent needs to carry out a thorough calculation of Shikha’s insurance needs. Online life insurance calculators give buyers an idea of their coverage needs, but a qualified agent can gain a more comprehensive idea of the policy buyer’s financial circumstances, and thereby offer a more nuanced estimation.
Q3. What types of insurance policies can I buy?
In Shikha’s case, the agent was eager to sell a single policy. He did not give her any options. This is wrong. The agent should bring to the table multiple policy alternatives, thereby enabling the customer to make an informed decision.
Q4. What is not covered?
Agents generally keep mum about exclusions in a policy, but Shikha must ask about these coverage limitations. It is best to get these confusions cleared out at the buying stage in order to avoid future shocks.
Q5. Can I convert or renew my policy later?
Most policies allow renewals without the insured needing to prove his insurability once again. However, it is best to check with the agent. If Shikha hopes to upgrade to a better policy in future, she should ask the agent about conversion rules and limitations.
Q6. What is the claim procedure?
The agent may promise to help the family with the eventual claim filing, but Shikha must find out about the procedure and necessary paperwork anyway. Life insurance is a long-term commitment and the agent could switch jobs or cities during this period.
Q7. Will my premium payments increase with age?
Insurance premiums tend to rise as the years pile on, but Shikha must check with the agent about possible increases following renewal or switching to a new policy.
Q8. Will the death benefit adjust for inflation?
As she buys a policy at the age of 32, Shikha can only guess that the death benefit will cover her family’s future expenses. But there is no way to guess inflation rates three decades on. Thus, Shikha must ask the agent whether the policy adjusts for inflation.
The above reflect only some of the information that the policy buyer must gather from the agent. My advice is to take your time when buying life insurance—do your research, ask questions, and finally, make an informed decision.
The author is the CEO of MyInsuranceClub.com, an online insurance price & features comparison portal.
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