The insurance sector in India has gone through several phases of reforms before emerging as the promising growth sector it is today. The historic Life Insurance of India Act passed by the Parliament in 1956 paved the way for the nationalization of the private insurance industry in India. From this attempt at complete nationalization in 1956 back to the reopening of the sector to private players in the late 1990s, India’s insurance sector has come a full circle for sure.
The fiscal year 2017 saw robust growth of 26 per cent in new premiums in the Indian life insurance sector, according to an Indian Express article. In India, investment in life insurance plans is still seen as a short-term approach, often as an instrument to avail tax benefits under Section 80 C of the Income Tax Act. For anyone considering investment in life insurance products, it is important to understand the policy inside-out and weigh in the following tips before arriving at a buying decision.
Tips to Buy Life Insurance in India
- Start early – Did you know that your age plays a key role in determining the cost of insurance or what is otherwise known as premiums? This is largely because of the notion that the possibility of ill health and death is less at a younger age. So, the kind of premiums you will be expected to pay at a younger age will be far less than what you will pay as you grow older.
- Ask questions – Never settle for tall claims made by an insurance agent. Dig deep and find out all the details about the policy in question. For instance, find out what the exceptions (if any) are under which your insurance provider can refuse to pay you the settlement amount.
- Know your sum assured – The sum assured is the guaranteed money that your nominated beneficiary will receive after your death. Before considering life insurance plans, you must know what the sum assured is going to be.
- Pick the right insurance provider – There is no dearth of private insurers in the market today. Know what their average claim settlement ratio and claims procedure is before tying up with one.
- A SWOT analysis helps – Arrive at the exact cover or the sum assured that you feel would be the right amount to take care of your loved ones considering factors such as inflation at a future point in time. A Strength Weakness Opportunity Threat (SWOT) assessment will help you in estimating the amount that would be viable.
Considering these tips can help you arrive at the best life insurance policy available in India to meet the important needs of dependents in your family when you are no longer around.