How to interact with those who introduce you to life insurance
- Check to see valid license and authorization for the business. For example:an Intermediary should be licensed to sell life insurance or general insurance or both (holding a composite license).
- Check whether intermediary has good knowledge of various insurance products/policies
- Your needs and objectives should be understood.
- Beware of tall promises and over-selling tactics. Consider only what you can afford.
- Ask questions and understand the policy terms and conditions of the policy in detail.
- Understand your commitments. Know amounts that you have to bear not only when you take the policy but when you surrender it or make a claim
- Get the intermediary to explain the full facts of the products, scope of cover and exclusions, as applicable. Compare with brochures and sales literature pertaining to the product you are considering or the intermediary is trying to sell.
- Insist on quality delivery and timely service. Tip: You can judge this by the turnaround time during the pre-application period when intermediary is dealing with you.
- Never ever sign a blank proposal form. Fill it yourself. If you find terms in the proposal form that you do not understand, ask the intermediary to explain it to you.
- When you make premium payments through an Intermediary, check whether he is authorized to do so by the insurance company and insist on a duly signed receipt immediately.
- After receipt of your policy, go through it thoroughly and if you do not understand certain terms contact your intermediary and get them explained. Remember, for life insurance and for health insurance policies of a term of three years or more, there is a free-look period within which you may return the policy if you do not agree with the terms and conditions therein.
- Ask the questions about documents and procedures involved in making a claim and understand them completely. In the event of a claim, there may be other agencies you may have to intimate apart from the insurance company. Get complete details about what you are expected to do.
- If you feel that your insurance introducer is not contactable or is unable to assist with your specific need, do contact the customer service help desk and talk to company representatives directly. If in doubt of any kind, you can also contact the insurance governing body – the IRDA.
Unit Linked Insurance Policy (ULIP)
These policies offer a combination of investment and protection where the investment risk is borne by the investor. A choice of fundsis provided with the flexibility to switch between them during the policy term.
The value of a ULIP is the prevailing value of units you have invested in the fund, which itself depends on fundperformance. In the event of insured's death or permanent disability, the policy will provide the Sum Assured (to the extent covered) to the insured's family.
Questions to ask while buying a ULIP.
- The charges applicable
- Fund options available
- Switching between funds
- Benefits if you: discontinue / surrender / make partial withdrawals
A ULIP has degrees of risk and rewards. Various charges are applicable to the premium paid and only the balance premium is invested in the fund/funds chosen. It is important to clarify with your insurer or agent, the exact charges that you have to incur.
It is important to assess your risk appetite and investment horizon before deciding to buy a ULIP policy. You must also read the terms and conditions of the policy carefully to understand the features of the policy including the lock-in period, surrender value, surrender charges etc.
Almost every kind of policy mentioned above can also be offered under ULIP plans.