Moneycontrol
Last Updated : Oct 30, 2015 12:04 PM IST | Source: Moneycontrol.com

Five things a first-time insurance buyer must know

Decide your financial goals first and identify your needs. It is best to compare the policies and identify the best suited one.

Yashish Dahiya
Policybazaar.com

You got your first salary and have been contemplating on how to begin your financial journey. Well, then this starter’s guide is just for you. To begin with, if you feel all confused and overwhelmed by the jargons and dynamics of the investment world then don’t worry as this is the dilemma that every first-time investor faces. It surely seems daunting initially but once you get a hang of the basics then nothing can stop you from reaching the financial zenith.

Here’s a list of five basic aspects of insurance investment that every first-timer must know:

Don’t procrastinate, insure early

Having a lot of time in your hand is a big boon for your financial journey. Start early and get insurance plans with low-cost premium. This is especially beneficial in the case of buying a term plan. Remember, age and premium are directly related:
Higher Age = Higher Premium
Lower Age = Lower Premium

Set your goals pragmatically

This is an important step before you venture out. Set your targets and then it will be easy to aim towards the direction otherwise you will be throwing darts in the dark. The factors to take into account for goal setting calculation are current earnings, liabilities and monetary expectations in future. Don’t forget the ever growing inflation rate while calculating. Derive an amount that you must have 15-20 years later. Then do backward calculation and you will know how much you need to save now.

Create a balanced financial portfolio

It is usually seen that when you start investing you tend to get influenced. Dad says, “Fixed deposit is the safest place to park your money” while your friend never stops raving about shares, “Invest in shares and become a millionaire overnight”. I would strongly suggest neither to get influenced by fast money making ideas nor to park your hard earned money in a dead place. Research well and take a pragmatic approach.

Grow the money and stay financially secured by investing in term plan as well as low cost ULIPs. Also, ensure that you opt for add on covers such as critical illness plan & personal accident cover to meet future requirement.

Compare and choose wisely

There is no dearth of insurance policies floating in the market each promising high returns and glamorous add-on benefits. You must sieve through marketing gimmicks and choose a policy that aligns perfectly with your financial goals. Also, there are various types of life insurance plans like whole term plan, traditional plans, endowment plans, and retirement plans. Assess your needs, understand the subtle differences of each type of insurance plan and then decide which one to buy. Don’t jump into buying whatever comes first, or the one pushed by your agent, or too many policies. It is best to compare the policies and identify the best suited one.

Don’t hesitate to take professional help

A lot of first-timers commit a financial blunder by taking advice from relatives and friends thereby ending up in a vicious cycle of bad investment. If you are not completely confident then don’t hesitate to take professional help. At a nominal cost, advisors will help you understand the market trends and the process. However, don’t rely on them blindly. It is your money after all! Research well, ask them questions, cross-check, and always read the policy documents before buying.

Alternatively, you could also visit insurance comparison websites for conducting first-hand research, evaluate your options and choose the one that suits you most.

Remember, the path to financial journey is not an easy one. You have to be on guard all the time. Be a smart investor and invest wisely.
First Published on Oct 30, 2015 12:04 pm
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