Everything you wanted to know about availing Life Insurance. Ask around and most people will tell you that they have life insurance. Dig a little deeper about the nature of the policy and the cover they enjoy, and chances are that they will cringe and express ignorance.
While this is better than not being insured at all, even incomplete knowledge can be lethal.
Most of us have a vague idea about life insurance but only a few know how it works. Read further to get a fair understanding about the steps involved in availing life insurance and to appreciate its working.
Once the decision to purchase a life insurance policy is taken, the first step is to determine the coverage needed i.e. the amount that the beneficiaries will receive in case the life assured is no more.
Life cover should depend on several factors including the age of the dependents, existing assets and liabilities, etc.
Once the needs are identified, select a policy type that will meet your goals. Broadly, there are two types of policies – ones that offer only a death benefit (Term insurance), and others that offer death maturity or investment benefit (e.g. Endowment Plans or Unit Liked Insurance Plans).
Step 2: Apply for the policy and get a quote
After selection of a suitable plan, you have to complete an application form and apply for a life insurance policy.
Remember that life insurance is not an off-the-shelf, one-size-fits all service. Insurance is a subject matter of solicitation.
The form requires you to furnish several financial, medical and family details-be prepared to input all of this accurately.
It is extremely critical that you give authentic details for every question. You can also select your nominee by filling up the form.
Based on factors such as age, gender, health, medical history, occupation, education, financial background, personal habits, hobbies, etc., the insurance company fixes the insurability and a premium amount.
Step 3: Pay Premiums Regularly
The next step is to pay regular premiums. In order to ensure uninterrupted cover and other benefits, it is important to pay premiums regularly.
One can pay premiums at varying frequencies like monthly, quarterly, half-yearly or yearly. Payments can be made online or through cheques.
Step 4: Avail Benefits – Claim Settlement/Maturity Benefits
Paying death claims and maturity benefits is the primary responsibility of an insurance company. In fact, they have an obligation to settle claims promptly. In order to file a claim, a form needs to be filled and sent to the company.
Relevant documents such as original policy document, KYC details of the beneficiary, death certificate of the life assured (in case of death claims), etc. are to be submitted to your insurer to support the claim.
In case of maturity benefits, the insurance company will usually send an intimation to the policyholder giving details about the maturity amount payable.
The policyholder has to sign the discharge voucher, which is like a receipt, and send it to the insurance company along with the original policy papers.
The above steps summarize the basic functioning of life insurance process. To learn more, keep reading.
Curated from Life insurance 101