Dos and don’t’s of Insurance

Insurance over the years has slowly become an object of necessity and a way to invest some money for your future. However, it being a topic of financial consequences we tend to commit some basic mistakes while purchasing insurance for ourselves or our family. There are certain factors which need to be kept in mind and some that ought to be ignored while making the choice.Let us find out more.

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Life insurance

  • Buy life insurance at an early age. Since premium is decided on your health chances are you might have to pay a lower amount for that.
  • Research on the kind of coverage you will get with your present health state. It is best to know the coverage and kind of insurance needed before discussing it with the agent. The coverage should be at least 10 times of your annual salary .
  • Do not buy a policy without understanding its features and benefits. Analyse the insurance cover you are receiving on the basis of inflation and money depreciation in the present scenario. What may seem a big amount to you now may actually be peanuts ten years later when your policy matures.
  • Don’t use life insurance as a means to invest money. That is because returns on life insurance are generally very low.
  • Life insurance is not a means of getting cash returns .If you wish to gain maximum cash returns then find out more about other financial instruments like mutual funds, saving bond etc.
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 Health

  • If you are a nonsmoker then look for a policy which requires less premium payment.Nonsmokers tend to reduce up to 50% on their premium amounts in this way.
  • Keep checking your coverage and modify it as per your requirement.
  • Don’t be wary of asking your family and friends for referral on which agent to consult. Most agents cannot be trusted as they tend to mislead the buyer. So do your own research online before discussing with agent.
  • It is advisable not to cancel an existing policy just because you have found another one better. If you really want to cancel then be sure the new policy is firmly settled and then only proceed.

Personal Injury Insurance

  • Compare all the policies well. Just remember if you are in an accident prone profession the amount of premium to be paid will be automatically higher.
  • Understand which all categories come under this category. Chances are death due to suicide, war or self-injury will not be covered.
  • It is essential to know that how much benefit your nominee or you will get after claim. In case there is a disability or minor accident you might only get a part payment of the sum assured.
  • Do not buy a personal accident insurance if you wish to save tax as these policies do not offer tax exemptions.
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Vehicle Insurance

  • Fill the insurance form yourself even if the vehicle dealer says he will do it for you.
  • Read the policy document and all specifications carefully so as to know which things are exempted and which are not.
  • Keep all the documents verified from the concerned authority’s .Submit your entire valid license papers to the insurance company for proper verification.
  • Find out any other additional benefits that you can get from the policy.
  • Do not leave any column or subhead and most importantly don’t let anyone else fill your form.
  • Do not forget to get your insurance renewed in time each year.

Asset or Property Insurance

  • If you have a lot of assets which would be passed on to your successors then try and buy a policy for a longer duration. Policies of this kind help in paying for any debts which arise at the time of the person’s death.
  • Do proper research and look around before committing. This is because there are many companies which offer insurance and if you do not shop around you might have to settle for an average offering.
  • Avoid raising claims on small incidents. Chances are the insurance company may recheck the frequency of your claims and refuse to process the one which actually needs to be done.

These pointers will help you in avoiding the most basic mistakes that you can make while choosing insurance for yourself. GetSmarterAboutMoney has prepared a small video for you to understand the same better. Go through it and hopefully the rest of the doubts you may have will also be cleared.

Must Read : Biggest surprise getting rich, know problems of rich.

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