Our conventional belief tells us that insurance is an unnecessary expense. However, with growing awareness, people are understanding the importance of insurance. In the present day and age insurance cover is available for almost everything you value in your life. Out of these, the most important insurance plan is the one that covers your life. Life insurance plans ensure benefits to your family/nominee after your death. It is an assurance that your loved ones will get a considerable amount after you to lead their lives without compromising. Like any other insurance policy, you will have to pay a fixed premium amount every year and the corpus is paid to your family after your demise. A large variety of life insurance plans are available in the market. Before buying life insurance compare online quotes to ensure maximum benefits. Here are a few things you should know before investing in a life insurance.
- Purchasing a policy is signing a contract
When you are buying a life insurance plan, you are actually signing a contract. You should thoroughly read and understand each and every term of the contract as it cannot be altered or reverted after signing. No matter what your advisor tells you, it is always a good idea to read the policy bond. Pay attention to the number of years and other minute details before buying.
- You can take a loan on your life insurance
You can take a loan on your insurance plan. Many companies offer this facility on the endowment policy of life insurance. Often unit-linked and terms plans do not offer this facility. The rate of interest charged on the loan would differ from insurer to insurer and also depends on the plan you have opted for.
- You can surrender the policy (charges applied)
Typically, the benefits of life insurance can be availed after the demise of the policy-holder. But you are also allowed to surrender the policy after a certain period. You should be clear that the surrender value does not depend on the amount you have as a premium. It rather depends on the kind of policy and the benefits it offers. These terms are mentioned in the policy bond paper.
- The key principle of policy contract is utmost faith
The contract you sign while buying insurance is based on the principle of utmost faith. You need to disclose every piece of information related to your present health condition and previous health issues. Also, your insurer is bound to clearly explain all the terms and conditions before the final papers are signed.
- Repudiation of policy is not a good idea
Oftentimes your insurer can ask you to re-consider your plan and buy a new one. However, it is not a good idea to repudiate you policy. If you are thinking of doing so, make sure that you get equal if not more benefits from the new policy as well.
- Defining nominee and payment
A lump sum amount of your insurance policy is paid to the beneficiary you had nominated at the time of buying the policy. For that reason it is important to specify a nominee so that the payment can be made without any hassle.