The Seven you know before taking Insurance

What you should know

1. If you have absolutely no dependent family (parents, spouse, children), then there is no need to opt for this policy. But, if you do have a family or dependents, term insurance is a must. No other policy will offer you as much value for money as this one.

2. Do not think of it as an investment. Look at it purely as an insurance tool and a safety net for your family. Should something happen to you, your family (wife, children or parents) will get a fair amount of money in hand.

3. If you opt for other forms of insurance where you are assured of your money being returned to you, the premium is much higher. And, to avoid paying such a high premium, there is the risk that you may opt for a lower cover and hence be underinsured.

4. Term insurance should be bought at a young age. The older you get, the higher the premium. The trick is to buy it at a young age for a lesser premium and for the maximum possible tenure.

5. You can opt for a single-premium term policy or a regular premium term policy. The former would definitely be more convenient but the latter would be a better option. The financial load is much less when paying a regular premium every year rather than a huge lumpsum at one go.

6. You can even opt for riders on your policy. These are optional add-ons which can be attached to the main insurance policy for an additional premium.

This additional premium is added to the main premium and has to be paid along with it.

For instance, a double accident benefit rider means that if you die in an accident, your family gets double the sum assured in your main policy. So if your cover is Rs 20 lakh (Rs 2 million), they get Rs 40 lakh (Rs 4 milion). Or, a critical illness benefit rider will cover specified illnesses like cancer or a heart attack. There is also a disability benefit rider where you get a specified income till the end of your policy should you become permanently disabled.

7. Premiums will vary between companies. So do take a look at a few before you make up your mind. But, don't make the lowest premium your sole criteria. Also, look at the features of the policy.