• Things to be Considered While Comparing Life Insurance Policies

    Life Insurance
    • Reduce taxable income by up to Rs. 1,50,000 deduction under section 80C**
    • Convenient payment options - annual, half-yearly, quarterly or monthly premium payments
    • Do more with plans that offer pure protection, retirement planning and investment options
    By Karishma | 02 Jun 2023

    Life insurance companies in India offer a host of life insurance products with a number of plan options and payout options. Given how attractive the benefits offered by each insurance policy can seem to be, it can seem like a daunting task to find the right insurance policy. Thus, to help you in your search for the perfect life insurance plan, we have listed down 7 parameters that you can use to compare various life insurance plans.

    1. Payouts offered: The payouts offered by a life insurance policy are largely determined by the type of life insurance policy you purchase. Term insurance policies, for example, only offer a death benefit to the nominee if the policyholder passes away during the policy term. A money-back policy, on the other hand, offers a death benefit upon the policyholder’s death, a maturity benefit if the policyholder survives till the completion of the policy tenure, and survival benefits during certain pre-defined policy years. Thus, make sure to compare the various payouts offered by the plans that you are interested in, and pick a policy that provides payouts as per your needs.
    2. Pricing: The way a policy is priced is extremely important, and you should, ideally, opt for a policy that offers you significant coverage at an affordable cost. Different insurance providers use varied yardsticks to calculate the policy premium. Usually, the premium rate offered to you is representative of the risk that the insurer will be undertaking by providing you the insurance policy. A few factors that can influence the premium quote of an insurance policy are the policy buyer’s age at entry, the sum assured opted for, medical history of the policy buyer, riders opted for, policy tenure, etc. You can check the premium quote of an insurance plan directly through the insurer’s website or by contacting the insurance provider on one of their helpline channels.
    1. Claim settlement ratio: The claim settlement ratio of a company refers to the total number of claims settled by a company against the overall claims received by them in a given financial year. Thus, a high claim settlement ratio indicates the company’s willingness to settle claims. The claims settlement ratios of various companies can be found in the IRDAI’s (Insurance Regulatory and Development Authority of India) annual report. This should be one of the key parameters that you should check before purchasing a policy from a particular company.
    2. Ease of buying: Insurance companies usually offer policies through both online and offline channels. It is always preferable to also have the option to purchase your insurance plan through online channels, either directly through the insurer’s official website or through trusted third-party insurance websites, since it is usually a more hassle-free and time-efficient process. In addition, also make sure to also check if the insurer offers you the option to renew the insurance policy online.
    3. Ease of Premium Payment: While traditionally policyholders were required to travel to the insurer’s branch to pay the due premium amount, customers, these days, also have the option to pay their premiums through the insurer’s official website through debit card, credit card, net banking, etc. in a hassle-free manner. Thus, when you are looking to purchase an insurance policy, it is vital that you check the premium payment process and the various premium payment channels that are available.
    4. Average time is taken by the company to settle claims: Usually, once the nominee raises a claim and submits the relevant documents, the insurance provider takes a few days to verify the documents and settle the claim amount. Thus, make sure to check the average amount of time taken by different insurance companies to settle claims. It is best to opt for a company that settles claims in a timely manner since it will ensure that your nominee doesn’t face any hassles during the claims settlement process.
    5. Reliability of the company: When purchasing an insurance policy, it is vital to also do your due research about the insurance provider in addition to reading up about the policy itself. Thus, with regard to this, make sure to check when the insurance company was established, the various customer service channels provided by the insurer, the number of branches across the country, the claims settlement and grievances solved ratio of the insurer, awards won, etc. Checking these factors will give you a good a good indication of the insurer’s reliability.

    Purchasing a life insurance policy is a significant financial decision and one that requires a good amount of time and research. Before you opt for any policy, make sure to first assess your needs and pick a product type accordingly. Also, make sure to compare various insurance plans on the basis of the parameters mentioned above to make an informed choice. You should, thus, look for an insurance policy that not only meets your coverage needs but also has an affordable premium rate.

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