Dos and don’ts when buying life insurance cover

Buying a life insurance policy is a click away thanks to aggregator portals and online platforms of insurers. While buying a life cover, it is important to understand what one is getting into as this will have a bearing at the time of a claim being made by the nominee on the death of the insured.

Proposal form
Do not provide any false information while filling up the proposal form. It could lead to disputes at the time of claim. Don’t sign a blank form which the insurance agent says he would fill in later.

Understanding the policy
Policy terms should be understood by the buyer. Know what would be the surrender value if you wish to discontinue. Understand the charges levied under policies such as Ulips.

Policy bond
Once issued, the entire policy document is sent to the investor physically or digitally. The insured should make sure that all the terms, sum assured, premium period, amount etc. match with the terms explained by the agent at the time of purchasing the policy. Any query should be highlighted immediately.

Free look period
Every policyholder gets a free look period of 15 days from the date of receipt of the policy document. After perusing the bond, if the insured feels that some of the terms are not in line or if any discrepancy is found, he can cancel the policy. The entire premium paid is refunded subject to deduction of some charges. If the policy is purchased online, one can cancel it within 30 days of receiving the policy documents.

Points to note

(Content on this page is courtesy Centre for Investment Education and Learning (CIEL). Contributions by Girija Gadre, Arti Bhargava and Labdhi Mehta.)