Questions to ask before buying a policy

There is a misconception that one can buy a policy and protect oneself against any number of eventualities. This is not true. Such a policy would cost a small fortune, and may not be worth it. It is important for any buyer to make a list of questions to ask before buying a policy.

You should also read the insurance document carefully before signing on the dotted line. This helps you make an informed decision and very often keeps you from buying unnecessary coverage. Instead of making unpleasant discoveries later on about what the policy offers and what it does not, ask the right questions at the beginning itself. Some of the questions that you need to ask are:

1. What are the exclusion clauses? Ask what the policy covers and what it does not. If there is a clause you do not understand, ask your agent or the company representative. All this will save you anxiety, as well as the purchase of unnecessary coverage.

2. What is the expiry policy? You need to know when your policy expires. In term policies it is important to know exactly when your coverage begins and ends. Many renewable term policies offer a grace period of about 31 days after the expiry date. But some policies are not clear on this point. Make sure that yours is.

3. Is your policy convertible and if so, for how long? It is quite likely that your policy has a conversion clause. This lets you exchange it for another type of policy without furnishing further evidence of insurability. Remember to ask about this clause and about all the sub clauses associated with it.

4. What about premiums? This is of course the single most important thing to be clear about. Companies have variable rates for premiums. Make sure your policy spells out exactly how much you'll have to pay along with the due dates. If the policy has variable rates, make sure you know how much you will have to pay.

5. Does your policy have a loan clause? Very often people are not aware that their policy has a loan clause, which lets them borrow from its cash value. Remember to ask about this along with the tenure and interest.

6. Is your policy renewable? Different companies have different criteria for renewal. Ask about it and if possible have it spelt out clearly in the policy document.

7. What is your policy's change of plan provision? Many simple policies have a clause that lets you change over to a more multi-dimensional, high-premium policy during the lifetime of your plan. Find out if your policy offers it and if it does then what is the criteria.

8. How do you make a claim? This obviously is a very important question. Ensure that the contact person or agency is clearly mentioned in the document along with the required guidelines. Also, seek information on what options the company has to refute your claim.

You must make your agent sit and answer these questions. The chances are you'll sign your way to a truly secure future.

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