Updated on 4th February 2017
Purchasing an LIC policy is not as easy as other people make it seem. Whether you have the help of a reliable insurance agent or are purchasing on your own terms, getting a Life Insurance Corporation (LIC) policy requires extensive research and preparation.
Buying life insurance is basically the same as jumping into the water with your life jacket on. You must know what you are getting into before you give your stamp of approval.
Here is a list of things you need to know prior to purchasing an LIC policy:
It is important to identify your needs
As an insurance buyer, you must have a clear set of standards. What type of insurance are you looking for? Do you want the regular life insurance plan or one with added features (i.e. accident and health, endowment or investment)?
For how long do you intend to pay? Are you buying for yourself or for your whole family? By identifying these insurance needs, you get to narrow down your choices and can better compare insurance packages from different providers.
If you have difficulty pointing out your needs but are still keen to buy an LIC plan, then you should seriously consider talking to an insurance agent. Look up agents near your residence. If you search online, you can read testimonies and reviews about various insurance agents. From there, you can select the agent who you think can provide you with the right answers.
If not, just call LIC, request to be referred to an agent and, when an agent is available, relay all your insurance concerns to that agent so that he or she can assess your needs and recommend suitable policies.
The ideal way is to choose a coverage that matches your financial capacity
Many life insurance buyers who fail to pay on time have bought policies with high premiums. Some buyers end up terminating their plan because they could no longer afford to pay. Others would argue that insurance prices have surged so unreasonably over the years.
Hence, the inability to pay. However, more often than not, it is not because insurance prices have increased that some people could not pay on time or put a stopper on their policies. One of the main reasons is that they chose a coverage they could barely afford.
The trick is to gather as much information as possible, compare different types of policies, evaluate whether they fit your budget and then decide accordingly. Never purchase a life insurance policy without knowing what top insurance companies in India are offering. You must have a clear idea of how much you would like to be covered so that you can pay for your policy until it matures.
Comparison lets you find the right LIC Policy for your needs
Besides sifting through insurance policies, comparing prices and reading through the terms and conditions, buyers also need to pay attention to two different types of life insurance plans. One is called term insurance, which is generally characterized by low premiums in the first few years.
Though affordable, this type of life insurance is plain and you cannot make additional money from it for future use. On one hand, cash value life insurance has three categories: universal, whole and variable. Each of these categories have different saving and money-making mechanisms. What they do have in common is that you have bigger return on investments after the maturation of the life insurance plan.
The advantage of the latter plan is that the additional money you generate can be used in the future. Decide whether getting a cash value life insurance is better than getting a simple low-premium term insurance. Neither one is greater than the other but choose the type of plan that suits your insurance needs.
Reading your life insurance policy thoroughly can spare you from future worries
You may have consulted with the best LIC agent in town but agents can only explain and make you understand your policy so much. To know every specific detail from yearly premium increases to payment interests to the scope and limitation of your benefits, you must take time to read and understand your policy.
In fact, it is ideal to read it before finalizing your purchase decision. The policy will set you straight about everything and let you know what you are getting into. If you do not agree or find it hard to compromise with the policy, then you have every right to bail out – that is if you read it before making your initial payment.
Top insurance companies in India set different terms and conditions. That is why during the comparison stage, it would be ideal to go through the policies of all insurance plans in your short list. This can be a time-consuming process, but if you want the best life insurance plan out there, then you have to leave no stone unturned. Sooner or later, you will be thankful for the effort you put in.
Keeping your existing policy is better than discarding it
If you are not happy with your existing policy, there is no need to cancel it. You can certainly buy a new life insurance plan with a better policy but there is more to be gained by keeping your current policy than totally replacing it.
Try to see if your existing policy can be changed or adjusted to the coverage or benefits you want. Many insurance companies provide this option. It would be such a waste to cancel your existing policy. You can also go for a plan with a top-up feature so that your existing plan can still be utilized.
Information dispels doubt and fosters understanding
Many insurance buyers regret their past policy choices and charge their mistakes to experience. However, first-time life insurance buyers need not go through such an experience just to get the perfect policy for their needs. If you are new to life insurance, the only antidote to your anxiousness and doubts is being informed.
In addition to reading your policy from cover to cover, poring through online articles and reviews, and discussing your concerns with an agent, you also need to expand your information sources by keeping up-to-date with insurance news, market trends, and the economy, among others.
With more pieces of information at your disposal, you are less likely to choose the wrong life insurance program.
A well-informed and reliable insurance agent is cost-efficient
If there are first-time buyers and buyers with existing insurance plans, there are also buyers who have no time to read their policies but have enough budget to buy a good life insurance program. What these buyers need is an agent who can explain the nitty-gritty of a policy within a short time frame. This agent must also be objective so that buyers with a busy schedule can see the pros and cons of each insurance program and choose well, in accordance with their preference.
Buyers must proceed carefully when touching base with an agent. Some agents tend to pressure clients into buying expensive policies that do not even suit their needs. If you are unsure, just ask the insurance provider directly and they will be the one to refer you to a reliable agent. Also, take note that a number of trustworthy and star-rated agents work for top insurance companies in India. Reading about their background and reviews or testimonials about their services would be helpful.
The type of LIC policy or insurance plan you get is only as good as your effort. If you want to obtain the coverage or benefits of your preference, then you must go the extra mile.
By setting your life insurance priorities, reading your policy, being informed and communicating with the right agent, you can certainly get an insurance plan that you know you deserve.