Insurance Sector in India
Selling insurance is a big business, Insurance companies have huge marketing budgets to lure you, Don’t fall in their trap, Read Policy terms carefully
In India, Insurance Regulator and Development Authority (IRDA) is the regulatory body for Insurance Policies sector supervision and development. Life Insurance Corporation of India, SBI life Insurance Co., Reliance Life Insurance Co., Birla Life Insurance etc. are some of the examples of Insurance companies in the Indian market. Insurance Sector can be classified in these 3 broader sections:
There are over 20 Insurance companies offering a plethora of policies under various segments for the consumers. This has bombarded the Insurance sector thus creating confusion among the public. The repercussions are to be encountered by the buyers who end up choosing inappropriate Insurance policy for themselves, paying lots of premium and still not receiving the claim at the time of damage.
Most of the people get duped due to lack of knowledge about how it works and rarely go through all the terms and conditions of the agreement, believing the words of the Insurance agent to be final. Taking Insurance is not bad but paying money for those policies that won’t get you any claim or the claim received would not be sufficient to cover the expenses and in either of the case, policyholder is at loss.
How Life Insurance Policies Work?
Insurance policy is a contract between the insurer and the insured (aka the policy holder), where the insured pays some premium. In the event if there occurs a damage that is covered under the terms of contract then the insurer has to pay the claim of agreed amount to the insured or the family. The amount of premium is generally quite low as compared to the amount of claim.
Being aware of just about everything is not feasible however it is still advisable to stay updated on matters and subjects that are directly or indirectly related to you like taking an insurance policy for self whether life or health or general.
Life Insurance policies – Are they really a bliss?
Insurance undoubtedly is a necessity but understanding the true needs of yourself and understanding the underlying meanings, advantages and disadvantages of taking life insurance policies is quite a daunting task.
Many people have fallen prey to those sweet talking Insurance agents who try to sell Insurance policies that we never even heard of and how not having that policy we are risking our whole life.
Advantages are something that are informed day in day out by the insuance agents and companies in addition to their huge marketing campaigns that leave an impact on the buyers directly. Do you really feel that all promotion is genuine? Is it that whatever is shown in the ads is the truth and there are no hidden facts about it?
No, the truth is far from what we see with our naked eyes. Let us take you through few drawbacks of and while taking life insurance policies:
- Misleading agents – What we see is always not right. A good agent has been trained so, to sell the most expensive plans to their buyers that end up earning them a high commission in addition to what the company gets through it. The buyer is naive in most of the cases and at times, feels helpless while deciding to take an insurance plan for themselves. One can find only few honest agents who really work towards getting the buyer, a life insurance plan that really suits his/her needs in the long run.
- Insurance v/s Investment – Insurance and Investment are different with different set of goals therefore do not follow what the insurance companies and agents tell you about investing in Insurance for best results in addition to risk coverage. One should really not be disheartened knowing that their policy would not give them high returns. This is because insurance policies are meant to cover risk and support your loved ones in case of mishaps. If you want to invest then there are numerous other options available.
- Unclear Priorities – Till the time, the buyer knows or has analysed his/her needs, there is no point thinking and taking a life insurance policy for yourself since till the time the priorities are known, you won’t be able to take the correct decision. Like you have a family to take care of and then there is your business as well so which is more important and what needs a risk coverage more are few among the many questions that arise.
- Tax Benefit – Insurance is to cover risk and save tax; if you really wish to save tax then there are other ways as well but just for the sake of saving tax, you really should not end up taking any expensive policy that is not at all required. One of the USPs as told by each and every insurance agent is that you will end up saving tax by buying a particular policy. Be wise, consider the suitable options for you rather than blindly following the alluring trap that these agents create around you.
- Under Insurance – Life is invaluable and giving it a price tag in the form of your life inusrance coverage does not do any justice to this beautfil gift of God. This does not mean that you should not consider taking a life insurance policy but do your homewrok well, analyse the market and plans available, consult few sensible people known to you in this trade so that neither you end up buying expensive plans unnecessary nor end up being under insured.
The end decision should be yours since its your life, your money and your family that will be affected.