5 steps to avoid purchase regret

Verify the policy details adequately before buying the life insurance policy

Life insurance serves as a safety net to mitigate future unfavourable circumstances. Being a crucial investment, it is imperative to know the details of what the plan entails, so when the time comes, you know you will be covered.

Not adequately verifying the policy details at the time of purchase is a major reason for customers buying policies that they later regret. Life insurance is a long-term investment; what can you do as an individual to avoid this regret? What can you do to avoid falling prey to mis-selling? Here are five simple ways to avoid this pitfall at the policy buying stage itself.

Be clear on the objective

Before buying, have clarity on the life goal you plan to secure through the life insurance policy. While money is fungible, it is always good to buy a life insurance plan for a specific need. This not only gives the reason to buy, it also helps you continue with the policy for the full tenure. You can also assess how each of the product features is linked to the need for which you are buying, thus reducing the risk of buying something that you regret later.

Also, don’t get enticed. It is a trap you should avoid at all costs. Always ask for the company authorised ‘benefit illustration’ customised for you and don't blindly fall for high returns simply because stock markets might have performed rather well in the last two years.

Do your own research

You must do your homework carefully and go through the product brochure and the other available information on the company's website to understand the various aspects of the policy you plan to buy. While sellers are a good source of knowledge, your own research goes a long way in making an informed decision. If required, talk directly to the company representatives. Even better, ask your agent if you can speak to other customers who have purchased the same/similar product five years ago. You do this for your property purchase, don’t you?

Fill the form yourself

The devil is in the details. When you get a job offer or buy property, do you sign the papers without reading? Of course not. So why would you sign your insurance papers without reading it? It's a common practice to sign only in places pointed out by sellers. When you fill the details yourself, you understand the nitty-gritty of the policy, the inclusions, exclusions, grace period, surrender value, and other vital details.

Also, closely look at the medical details asked in the form.

Concealing information related to your health can lead to claim rejection at a later date, defeating the very purpose for which you bought the policy.

Check product name

There are multiple policies sold by life insurance companies — term plans, ULIPs, and traditional plans. There are minor product variations under each category. For example, when you procure a home loan, a traditional endowment policy may not serve your purpose.

To cover your home loan requirement using a traditional endowment policy, you will have to invest a huge sum as the home loan amount is generally large. Instead, you may go for group credit life plan customised for loans available with your mortgage loan provider, which will be available for a much lower rate of interest.

Wait for a call from insurer

Most life insurance companies call you to verify your understanding of the key terms and conditions of the policy. This is done to ensure that you have understood the policy, its benefits and various terms and conditions.

If you feel that the policy sold was different from what the seller explained, you can cancel it. In any case, there is a ‘freelook period’ after you receive the policy document, during which time you can chose to return it within 15 days if it does not meet your expectation.

Being aware is the best way of protecting yourself against future regrets while purchasing a life insurance policy for the long term.

The writer is Senior Director and Chief Operations Officer, Max Life Insurance

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