IRDAI receives over 1.5 lakh complaints every year and 3 out of every 10 policies issued are not renewed after the first year.
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Insurance Policy : If you are planning to buy any insurance, then you have to take care of these things first, otherwise you may suffer a lot. Due to which you may have to face many problems. Life insurance is the most important financial product, as it can protect all the goals of an individual. But it is also the most sold and least understood financial product by investors. Insurance regulator IRDAI receives over 1.5 lakh complaints every year and 3 out of every 10 policies issued are not renewed after the first year.
According to Money9’s report, out of 2.8 crore policies implemented in a year, about 80 lakh are not active after one year. Not only this, more than 60 percent of the policies are either surrendered or lapsed after a few years. When this happens, you either blame the agent or the insurance company. Policy agents are known to exaggerate the benefits within them. Relationship managers of banks are also guilty for this. His high target and hefty commission on insurance policies have made him a salesman.
These things should be kept in mind
- As a policy buyer, it is your responsibility to understand what you are getting into before signing the cheque. With the tax planning season in full swing, many people must have finalized their plans to buy life insurance.
- If you are also doing any such planning, then today we will tell you how you can buy a good policy. What questions should you ask before buying a policy?
- Very few people in India are able to continue their policy. By the fifth year, around 60% of the policies issued either lapse or are surrendered. Life insurance is important, it is absolutely necessary if your spouse, children, parents and even dependent siblings are dependent on your income. But if you are not married and no one is dependent on your income, then you do not need insurance cover.
- If you have made a lot of wealth and your spouse is also able to earn, then you also do not need it. Even if you are retired and no one is dependent on you, you do not need anything.
- After knowing the eligibility for the policy, it is important that you know whether you are buying enough life cover. It should be around 8-10 times of your annual income. But this is a rough estimate and may not give an accurate picture of your insurance needs.
- Always the life insurance cover should be sufficient to generate income that can take care of family expenses till your dependents are self sufficient and clear all outstanding loans, especially the large home loan.
- If a person is paying a hefty EMI and something untoward happens, the bank will take the house and your family will have to move out. Apart from this, one should also be able to perform other responsibilities. Don’t think that a cover of Rs 1 crore is enough.
- The ever-increasing inflation is reducing its value. The life insurance policy should replace the individual’s income, settle all debts and make provisions for future expenses.
- While life insurance protection gives the impression of a long term security, it is common for people to end up with more than they can afford when they sign up for a policy.
- Choose the premium of any policy not according to today but on the basis of the years to come. Check whether you can afford the premium for the entire term of the policy or not.
Life insurance is the worst way to save tax
According to experts, life insurance is the worst way to save tax. Insurance is for 20-25 years, in such a situation, customers get misled by the maturity amount estimated by the insurance agent. For example, a policy with an annual premium of Rs 50,000 and a maturity amount of Rs 30 lakh after 25 years may sound attractive, but the returns work out to only 6.22%.