Life is unpredictable and while you work hard to secure your and your family's future, unexpected events can create financial challenges. Insurance acts as a safety net, protecting you and your loved ones from risks related to health, life or property. Choosing the right coverage ensures financial stability in times of crisis.
But with so many options available, how do you choose the right coverage? Let's find out.
Assess Needs
Evaluate your financial situation and potential risks before buying an insurance policy. For health insurance, consider medical history and family size.
For life insurance, assess your income, liabilities and dependents' financial needs. If it's vehicle insurance, check the value of your car and potential repair costs.
Choose The Right Sum Assured
The sum assured or coverage amount should be sufficient to cover your needs. In health insurance, a cover of at least Rs 10–15 lakh is advisable for a family, considering rising medical costs.
For life insurance, the sum assured should ideally be 10 to 15 times your annual income to provide financial security for your family in case of an emergency.
Compare Policies, Features
Different insurers offer varying coverage and premium amounts. For example, if you plan to buy a health insurance policy, use online comparison tools to check features, such as cashless hospitalisation, critical illness benefits and settlement ratios. Choose a policy that balances affordability with detailed coverage.
Check For Riders, Add-Ons
Many insurance policies offer optional riders, such as accidental death benefits, critical illness cover or maternity benefits in health insurance. While these improve coverage, they also increase premiums. Choose add-ons wisely, based on your specific requirements only.
Understand Exclusions, Waiting Periods
Every insurance policy has exclusions — situations where claims are not covered. For instance, in health insurance, any kind of pre-existing disease can affect your coverage. A pre-existing disease is any illness or condition diagnosed or treated before buying the policy.
Insurers often impose waiting periods, exclusions or higher premiums for such conditions, which can impact your claim eligibility. As such, understanding exclusions or waiting periods becomes crucial while buying an insurance policy.
Consider Claim Settlement Ratio
Claim settlement ratio represents the percentage of claims an insurer settles in a year out of the total claims received. It serves as a big indicator of an insurance provider's credibility and efficiency. A higher CSR suggests a greater likelihood of hassle-free claim approval, making the insurer reliable.
Review Premium, Affordability
While a high-coverage policy is beneficial, ensure that the premium fits within your budget. Choose policies with affordable premiums and good benefits instead of picking the cheapest one with limited coverage.
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