Reader's corner: How to invest in an insurance plan and avoid mis-selling

I want to invest my savings in an insurance plan but am afraid of mis-selling. How can I identify and avoid this? 

To ensure that customers’ interests are well protected, the regulator has laid out stringent guidelines and processes regarding how insurance products are sold. Here are some quick checks you can run. One, ask for the Benefit Illustration of the product. Check for discrepancies in the policy information provided—premium amount, policy term, premium payment term, the sum assured, applicable charges (if any), and other benefits under the policy. Two, review the product’s sales literature and policy document  that are available on the insurer’s website. Three, respond to the verification call that your insurer makes when it receives your premium. This enables the company and you to be on the same page. And finally, there is a 15-day (30 days in the case of distance marketing) policy cancellation window, which you can use if you feel the policy does not match your life goals.

I am not pleased with my existing life insurance company. Is there a way I can transfer to another? 

Currently, there aren’t any provisions for migrating a life insurance policy from one insurer to another. If you wish to discontinue a policy before its maturity period, you can surrender it. However, do read and understand your current policy features and the benefits available to you before surrendering. For instance, if you have a unit-linked insurance plan (Ulip) and you feel that the returns are low, you have the option to switch between Ulip funds based on your investment needs and risk appetite. This feature allows you to move your investments from one fund to another within the same Ulip plan.

I am a 33-year-old single mother with a three-year-old daughter. I save up to Rs 25,000 every month. I don’t have an insurance plan and want to buy one. What is the ideal coverage I should buy? Is there anything in particular that I should be mindful of?

I will not be able to suggest an exact sum assured. Use any of the calculators available online to come up with the ideal life cover based on your current financial strength and future goals. Keep in mind all your future needs, especially those of your daughter, inflation, health costs, and so on. Be true while making these calculations. Your insurance policy can not only be a pure term plan. You can even think of investing in Ulips that help build a corpus for any significant life goal you may have in mind, such as your child’s education. Don’t buy in haste. Do all the necessary checks before investing in a plan.

I am a 48-year-old professor at a private university. I bought a term insurance plan. I am unable to pay the premium now because of some unexpected expenses. What option do I have other than to surrender the policy?

We have had instances where people were unable to pay insurance premiums due to unforeseen expenses. Check if in your policy there are other premium payment modes. If an annual payout seems like a burden on your finances, opt for a monthly payment mode (if available in your product), where the premium amounts will be smaller. In case your cash crunch will last for just a few days, you may pay the premium during the grace period, which is usually 15 or 30 days (depending on your current premium payment mode) from the premium date. If you fail to pay the premiums within the grace period, your policy will lapse, but you can revive it subject to the terms and conditions for revival.

The writer is MD & CEO, Bajaj Allianz Life Insurance. The views expressed are the expert’s own. Send your queries to yourmoney@bsmail.in