When it comes to purchasing an insurance policy, it is very important to ensure that you pick one that fits your needs and requirements. Not picking the right insurance policy can leave you unprotected from eventualities and contingencies. That’s why, in this chapter of the module, we’re going to take a look at how to pick the right insurance plan. Here’s a quick look at a few things that you should consider when picking an insurance plan for yourself and your family. 

• Identify your needs

The first step to getting the right insurance is identifying your needs and requirements. Getting right into the purchase process without knowing what your needs are is a recipe for disaster. Therefore, it is always a good idea to lay out your needs first and then move to browsing the various insurance plans available to find out what fits best. If the insurance plan involves your family, it is a good idea to sit and talk with them to get their opinions and views out before proceeding with your search for the right insurance policy. 

• Use an insurance premium calculator

Once you’ve identified your needs, the next step is to use an insurance premium calculator. Wondering what it is? An insurance premium calculator is essentially an online tool that can help you determine the premium that you would have to pay for a policy. 

All that you would need to do is enter the amount of coverage, the tenure of the policy, and a few other details. The calculator will instantly give you an estimate of the premium that you might have to pay towards the policy. 

The insurance premium calculator can not only help you determine just how much insurance you need, but also how much you can afford. That said, here’s something that you need to know. Since the premiums for an insurance plan tends to vary from one insurer to another, make sure to use the insurance premium calculator of the insurance provider with whom you wish to partner with. 

• Compare the different plans available

Now, for any given insurance policy, there are usually multiple different choices available. While having too many choices is good, it may sometimes lead to confusion and prevent you from getting the right insurance policy for yourself. To ensure that you make the right decision, it is important to filter out the insurance plans that don’t fit your needs. Once you’ve done that and are left with a bunch of plans that you think are right for you, the next logical step would be to compare the various plans. 

This way, you can easily identify the differences between the plans. For instance, through a comparison you might find that while one health insurance plan might provide OPD coverage up to just Rs. 20,000, another offers up to Rs. 40,000 for a nominal extra cost. By bringing out the differences such as these between the plans, you can pick the right insurance  that meets your needs more easily. 

• Choose your riders carefully

Riders are basically optional add-ons that you can choose at the time of purchasing an insurance policy. These add-ons essentially enhance the coverage offered by the insurance over and above the base policy, in exchange for a nominal additional premium. However, opting for more riders than necessary, although it might enhance your coverage, can be detrimental in nature since it can end up skyrocketing the premium that you would have to pay towards the insurance plan. 

Therefore, it is of utmost importance to ensure that you choose your riders more carefully. It is a good idea to refrain from opting for riders just because they offer enhanced coverage and to only choose them if you or your family are likely to benefit from it. For instance, say that you wish to purchase a term insurance policy. And that you’ve already maximized the sum assured under the plan. Considering the fact that the sum assured under the plan is by itself more than enough to cover your needs, opting for an additional accidental death benefit policy in this case may not be the right way to go since it would only hike the premium. 

• Look at the insurer’s profile

And finally, the last thing that you should consider when picking the right insurance policy for yourself and your family is the insurer’s profile. Not all insurance providers offer the same products or services. And even if they do, the support that they provide to the policyholders may vary. 

Therefore, before you go ahead with your purchase of an insurance plan, it is essential to look thoroughly into the insurer’s profile to get a good idea of their standing. Remember to look for things like the claim settlement ratio, recents awards and nominations, customer reviews, and solvency ratio, among other things. Remember, an insurance plan is only as good as the insurance provider. 

Wrapping up

Once you’ve considered and taken into account all the above factors to your satisfaction, only then should you move towards purchasing an insurance plan. And with this, we’ve finally come to an end of another module of Smart Money. Make sure to check out the end quiz and podcast of this module for a quick recap of the things that we’ve learnt. 

A quick recap

• The first step to getting the right insurance is identifying your needs and requirements. 
• An insurance premium calculator can not only help you determine just how much insurance you need, but also how much you can afford. 
• By comparing various insurance plans, you can easily identify the differences between them. 
• It is a good idea to refrain from opting for riders just because they offer enhanced coverage and to only choose them if you or your family are likely to benefit from it. 
• Before you go ahead with your purchase of an insurance plan, it is essential to look thoroughly into the insurer’s profile to get a good idea of their standing.