10 things to ensure with your life insurance agent
Are you going for a life insurance? Congratulations, because many of us still do not understand the necessity of taking a life insurance. I often hear excuses like I do have dependants so I do not need to go for a life insurance at all, or I would rather invest in other instruments like bank deposits and mutual funds instead of life insurance because of lower inflation adjusted real returns; and so on. Congratulations for your decision to go for a life insurance in the first place. Now, as you proceed to settle the deal with your life insurance agent, there are a few things to ensure. Unfortunately in India, people still do not have a business-like attitude when going for life insurances. They bargain over a few annas in the vegetable market, or a few rupees in a garments store. Even nowadays people are smarter than before to carefully go through mutual funds documents before investing, thanks to the statutory warning and the great works that all financial planners in India are doing together. Nevertheless, when it comes to taking life insurance, people still need to an awareness that every customer should possess. What are they?
Given below is a checklist of 10 things to make sure about your life insurance agent. They can save a lot of future troubles and paper-works. Pay attention!
- Authenticity: Make should your life insurance agent comes with a valid license. The person should also be able to produce to proper identifications and business cards in support of the authenticity of himself or herself, or the business house being represented.
- Informational Transparency: See whether your life insurance agent is letting you know clearly about the all the products available, or is he pushing you excessively towards a certain product no matter how different your requirements are. If the second, the person is trying to sell a particular product and you should be cautious. Yes, there is no harm in promoting a certain product or looking for more commissions for an agent, but that businesslike attitude must have a limit too.
- Monetary Transparency: Do you feel that your life insurance agent is hushing some monetary aspects from you? Or, is the person is transparent about the exact premium amounts you need to pay? Is there any hidden charge? You have the right to shamelessly ask an explanation for every single penny your agent asks for. After all, it is your money!
- Personalized Advice: Is your agent paying attention to personal scenarios like your income per annum, lifestyle and standard of living, assets, liabilities and other such minute financial details? Every person belongs to a different financial scenario so the suitable insurance products need to be different as well.
- Insurance is not Investment: A life insurance is not an investment instrument. Yes, I repeat, a life insurance is meant for risk cover and is not to be seen as an investment instrument. That is why I always prefer term covers to endowment plans and money back policies; few people understand that the insurance companies are trying to make their wallets heavier by encashing endowment psychologies (anyway, that's a perfectly legal business strategy for them). Therefore, if your insurance agent emphasizes on the return part instead of risk cover, I think it is time to say good bye. I often received telemarketing calls about certain insurance instruments giving good returns after 15 years, or some paying the money back to you on the go. Typically, those money back plans have lesser sum assured and therefore lesser risk covers. Whenever I receive such calls, I humbly reply, no, thank you! Steer clear off your insurance agent if the person is trying to sell a money back plan depsite your plans for going for term covers.
- Risk Profiles: Is your insurance agent taking your risk profiles into consideration to figure out whether you need traditional insurance plans or unit linked insurance plans? If you are given a choice, I suggest you to always go for traditional insurance plans, the reason being the above paragraph.
- Tax Benefits: The agent should help you understand the various tax benefits.
- Truthful Declarations: Most of the times, the agents are just looking for adding one more policy in their list and they are not genuinely paying attention to the benefits of the clients. An illegal but very common tendancy among life insurance agents that roots from this mentality is that, they want you just to sign the form and the cheque and they will furnish all the information themselves. Be alert! Most of the times the agents will provide false information about you and try to make the insurance as smooth as possible. For example, if you are a chain smoker or a seasoned alcoholic, your insurance agent in most cases will still declare in the form that you have never smoked a single cigarette in your whole life, or you do not know what an alcoholic beverage looks like. Declaring false statements about yourself are not just illegal and unethical, but they are extremely risky too. For example, if your agent declares that you have never consumed alcohol in the insurance agreement, and you die in some disease related to alcohol consumption, chances are high that the claim will be forfeited by the insurance company on grounds of false information furnished. Even if the insurance company pays back the premiums in full, you may still loose any additional rider benefits or vest bonus amounts. Do you want your children or kinsmen to get frustrated over settling the claim with the insurance company, or get no money at all, only because years back you were too lazy to spare you a couple of minutes and fill the insurance form yourself? Do fill the insurance form yourself. Even if you allow your insurance agent to do it on your behalf, please make sure that all the information furnished are true and you have checked them in person.
- After Sales Services: You must make sure you get good after sales services from your insurance agent. That is to say, the agent must assist you in reassessing your risks and liabilities over the years and make necessary changes in the policy if any, help you settling claims, cooperate in adjusting premiums and so on. Your agent is also bound by law to remind you of your coming premium payment in time so that the policy stays live. Again, if the policy is lapsed anyhow, it is the duty of your insurance agent to help you revive the lapsed policy.
- Matter of Solicitation: Insurance is a matter of solicitation and no insurance agent should force you to buy a certain policy if you do not want to buy it. Yes, they can promote it, explain the features, and request you to consider the policy, but they can never force you or disturb you repeatedly for purchasing an insurance. If they do, you have every right to lodge a legal complaint.
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