Sunday, 1 April 2012

How To Choose Right Insurance

A Financial Plan without Life Insurance Cover is like driving a Car without Breaks. Choosing the right insurance is challenging task. Analysis and systematic approach are key to make the appropriate decision.
Step 1 - Analysis: Your Analysis should start off with couple of Basic questions. Do i need insurance? How much Insurance Do i need? Click here for quick analysis.
Once you are done with Basic Analysis you need to go for systematic or disciplined approach for choosing the right provider and necessary insurance cover.
Step 2 - Systematic  or desciplined approach :Here are few key parameters that will assist you in this approach.
  • Settlement Rate Information: Settlement Rate/Ratio should be top most priority when you choose you insurance provider. It is meaningless to buy insurance from a company that rejects claims for 5 out of 10 policies. Good Settlement rate and Reputation of the company should be the top filtering criteria.
    This information is available on IRDA Site. Click here for details.
  • Quotes Comparison: Now that you have shortlisted few insurance companies with good settlement ratio, you next step would be to compare the premium details for these companies. Quote Comparison will further help you to narrow down your provider list. There are two ways of doing this, calling each of these companies or visiting online comparison website or Tools.
  • Compare the Features: Once you have filtered Providers based on Settlement Ratio and Quote Comparison, Its time to compare the features provided by each of these companies. Excel Sheet is best way for comparing the features provided by each of these companies. Dont be emotional when you do the comparison. Example: If “XYZ” provider insists Medical Examination and “ABC” has Medical Examination as Optional. Most of clients would prefer “ABC” provider over “XYZ”.  This is not right, in reality; “XYZ” should be preferred over “ABC”. Your Health details are very important and plays a very important when it comes to claim settlement in case of untimely death. Don’t shy away from Medical Examination.
  • Right Insurance Cover: Simple and Basic Answer would be 12 to 15 Times your Gross salary + Liabilities.
  • Tenure of Insurance: Be reasonable and Logical when you choose the Tenure. A company might offer you cover up to 65 or 70. Ideally speaking by 60 you should be done with all your commitments. Logically Term insurance should end once you retire.
  • Split your Insurance: Split your insurance with two providers. Every 5 years, evaluate your insurance Need. In case you think, you have enough wealth and need lesser cover; you can discontinue one the policy.
  • Finally last but not the Least: Once you are done with your ground work and analysis make sure you post these details on to good Finance Forums before you make the final call or commitment. Posting your analysis on forums will help you in getting information/opinion from Finance Gurus. Your analysis might help others who are looking for similar information.  Investta forum is one place where in you can find wealth of information and answers for your question.. Here is the link for Investta Forum.
Readers are welcome to share any points that could be added to this article.


Stacy Barbee said...

Insurance is a long term investment. So, choosing the right kind of policy matters a lot, if you want to ensure the safety of your belongings. And you can only get the best quality insurance, when you have enough knowledge to distinguish between the good and bad insurance products.

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