Buying a life insurance policy is a crucial decision that one should take after evaluating all the factors. Keep reading this post to know the basic features to look for when selecting a life insurance policy.
An insurance policy is a shock absorber during unforeseen times or contingencies. While there are many types of life insurance policies, the most basic function of this type of policy is to provide financial security to the family if something happens to the policyholder.
Since life insurance policies are usually for many years, studying them well before purchasing is important.
To avoid any regrets later, we list some basic features for better understanding –
What are Policy Inclusions?
Read and understand the inclusions in your life insurance policy before buying. The term ‘inclusions’ refers to all the covered policy provisions. These provisions could be –
- The insured events, their occurrence, and the assured compensation
- The death benefits
- Accidental coverage
- Recurrent returns, if any
- Lumpsum benefits
- Additional inclusions, etc.
Assessment of these features will help in gauging the worthiness of the policy.
What are Policy Exclusions?
The term ‘exclusions’ refers to all the conditions, provisions, and events not covered in the life insurance policy. Study them carefully to stay better prepared for the contingencies, be clear where the policy will not work. Some of the common exclusions could be –
- Pre-existing medical conditions
- Unnatural deaths like suicide
- Demise due to self-inflicted injuries
- Lifestyle diseases
- Medical conditions due to drug abuse
- Getting involved in illegal or criminal activity
What are the Policy Limitations?
Apart from inclusions and exclusions, every life insurance policy has some restrictions too. Understand them before purchasing a policy to avoid paying a higher premium or experiencing difficulty in filing a claim. Some of the common restrictions are –
- Minimum & maximum age of the policyholder
- Maximum coverage terminating age
- Sum assured
- Minimum & maximum riders etc.
What is the Claim Settlement Ratio?
If the claim of a life insurance plan remains unsettled, then the policy objective fails outrightly. A good claim settlement ratio indicates that the life insurance company has settled the maximum claims received in the given financial year. Therefore, opt for such insurance companies for expedient settlement of claims.
What is the Revival Period?
Whenever premiums are not paid on time, an insurance policy may become inactive or get lapsed. This may happen when the premium payment jumps even the grace period. However, the insurance provider may reactivate the lapsed policy after the payment of the pending premium within a specific time called the ‘revival period’. As a policyholder, check the revival period and other regulations associated with it.
What are the Add-on Riders?
Add-on riders strengthen a life insurance policy and provide supplementary coverage to the policyholder. Riders bring in several additional benefits like –
- Accidental death benefit
- Critical illness benefit
- Accidental disability benefit
- Income benefit
- Waiver of premium
Does the Policy Include Conversion Feature?
The conversion feature enables the reconstruction of a term life policy into another plan. Other plans could be an endowment plan or a life insurance policy. This feature is useful for those policyholders who want to convert their term insurance policy into endowment due to declining health.
Closely check the suggested features before purchasing a life insurance policy. Read and understand all the terms and conditions or take the help of an expert advisor. Scrutiny of the policy features will ensure the financial security of the policyholder’s family.