Insurance needs are unique to every individual; there is one-size fits all when it comes to buying insurance. Being insured offers protection and a hedge against unforeseen circumstances. Insurance policies: be it life, health, travel, motor, etc., are extremely essential in financial planning and wealth management. However, with a plethora of insurance products available, along with heavy paperwork and complex jargon, selecting the right plan and the right cover amount can be daunting.
To ensure you choose the ideal insurance scheme for yourself, consider these five key criteria:
1. Cover amount:
Assessing the coverage provided by a plan is crucial when purchasing insurance. Often users are overinsured or underinsured, or sometimes don’t have insurance at all. But it’s extremely important to calculate a cover amount suitable to your needs, based on your current and future expenses, plus existing savings. Avoid selecting a plan that provides far more coverage than you require because it will subsequently increase the premium you have to pay.
2. Age till you’re insured
Another important factor to consider is till what age you wish to be insured. For instance, individuals might buy insurance till they are 85 when in reality they might not need it till that age. Ideally, insurance should be bought till the age your dependents financially rely on you.
3. Evaluate the insurer
Picking the right insurer is very important, especially when it comes to the claim settlement process. That’s why it’s crucial to look at insurers who have a credible track record of high settlement rates, lowest volume of complaints, and high solvency ratio.
4. Rider benefits
These are add-ons or features offered along with the policy that provide extra benefits, apart from the core death benefits. These add-ons are critical to consider, as they allow you to customise your coverage to meet your specific needs. Evaluate which rider benefits are relevant to your situation, such as critical illness cover, accidental death benefit, or disability riders, to ensure comprehensive protection tailored to your requirements.
To reiterate, purchasing insurance does not have a fixed approach that should be followed by everyone, but analysing the schemes based on these criteria can make the process much simpler. Equipped with the right kind of information, purchasing insurance becomes a very simple procedure, with its benefits being countless.
Kavitha Subramanian, Co-founder, Upstox