Expert advice

Dec 11, 2013,15.28 IST

3 important questions to ask your life insurance agent

The problem with a surprising majority of life insurance buyers is their unwillingness to research the products that they are buying. Frequently enough, these buyers leave the purchase decision to their insurance agent

Deepak Yohannan
myinsuranceclub.com

The problem with a surprising majority of life insurance buyers is their unwillingness to research the products that they are buying. Frequently enough, these buyers leave the purchase decision to their insurance agent; all that such buyers do is to write out the cheque.

Even though most of us have been guilty of this behaviour at one point or another, we all recognize the necessity of engaging with the agent. Regardless of whether you are a first-time buyer of insurance or a veteran in this regard, one cannot underemphasize the importance of discussing with the agent the various aspects of policy purchase.

While there is no end to the queries that you could put to your insurance agent, the following three questions are crucial.

1. What are my coverage requirements?
2. What are my insurance options?
3. What are the benefits and risks of the chosen policy?

Now, let us examine these questions one by one.

What are my coverage requirements?
This should be your starting point. Most online insurance sellers offer an insurance needs analysis calculator, which requires you to key in your personal details (age, marital status, etc.) and your financial details (current income, current or expected future expenses, etc.), and finally reveals your coverage needs. While such calculators are convenient, they are not tailored to your specific needs. This is where the insurance agent can help. By asking you pertinent questions, a good insurance agent will be able to estimate your coverage needs in a better and more comprehensive way. Therefore, before you even start looking at policies, your agent should inform you about the insurance coverage that you need. This will determine everything from the type of policy required to the annual premiums and optional riders.

What are my insurance options?
Rather than depend on your agent to make the choice for you, ask him to familiarize you with the different types of available policies. Your life insurance agent will then introduce you to the pros and cons of term plans, whole life plans, endowment policies, and maybe even ULIPs. For instance, while a term plan may be the policy of choice for the buyer on a tight budget, an endowment policy is ideal if you are saving for a future goal and do not mind the higher premiums. Once you understand what each type of policy entails, you can make a better decision regarding the policy type that best suits your lifestyle. This question is important because even an experienced and trustworthy agent has only a limited idea of your financial needs.

What are the benefits of the chosen policy?
When trying to sell you a policy, insurance agents often wax eloquent about the associated benefits. However, even as you talk about the sum assured and maturity benefits, look at factors like high surrender charges, exclusions, duration of the free-look period and the availability of add-on critical illness or personal accident riders, among other things.

Asking the right questions is the key to finding the best policy for your insurance needs. So don’t be afraid to quiz your agent.

The author is the CEO of MyInsuranceClub.com, an online insurance price & features comparison portal.

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