1.Don’t invest in any policy just because one of your friend or relative has invested in it. Your requirement might not be the same as your friend. What might be good for your friend might not be good for you.
2.Ascertain how much insurance cover you require. It’s a common to see a person paying a heavy premium but still remaining under insured. For example a person having a monthly salary of 50,000 and having 2 dependents a wife and child should have an insurance cover of at least 50 lacks but what happens is he takes out an endowment policy of 10 or 15 lacs paying an annual premium of around 60,000. That leaves him underinsured by 35 lacs. Instead he should buy a cheap term plan or a whole life insurance cover.
3.Try to get yourself insured at a young age. Mostly it’s a common practice to see that all other expenses are met with and insurance policy is the last thing on our mind. At young age the premium you pay is slightly less and not many medical tests are required. The insurance premium increases with age and there are various types of medical tests required as per the age. If the tests are not up to the mark then the insurance companies might charge you an extra premium and even reject your insurance proposal.
4.Don’t take out insurance policies just to save tax. There are many lucrative options available to save tax.
5.Don’t buy insurance for investment purpose. Insurance policy will hardly give you any returns and it is solely for your dependents. You family member should be able to maintain the same lifestyle in case of anything unfortunate. Go for a pure term plan that will give you high insurance cover at a very low premium. Even though your premium is not refunded and you don’t get anything if you survive the term, a term plan is the best for your insurance needs.
6.Don’t get carried away by the claims of your insurance agent. Cross check the details provided by him.
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