What to remember while buying an Insurance Policy

Things to Check

Cost of premium
Network
Insurance rider
Deductible
Claim settlement ratio

1. Cost of Premium

Premium is the amount you pay per month/year to avail an insurance policy. Your Premium payments should not be more than 10%-15% of your monthly income.

Example:

If you are earning ₹12,000 per month, your Premium payments should not be more than ₹1,200 to ₹1,800.

2. Premiums Can Vary

The Premium that you pay may differ depending on various factors such as:

Insured Amount

Higher the insured amount, higher the premium

Age

As you age, the Premium amount you would have to pay will increase

Pre-existing illness

If you have a high-risk disease (like diabetes, BP, etc) while applying for a insurance policy, your health insurance premium amount will be higher than others who don’t.

Pro Tip

Remember to do this:

Check your eligibility for government insurance schemes and pick an Insurance Company which provides that scheme. You will then be paying a lesser Premium.

3. Network of hospitals and repair showrooms

Most Insurance Companies directly pay the hospitals and repair showrooms. This is called Cashless Claim Settlement.

If we opt for Cashless Claim Settlement, we should choose an Insurance Company which has a good network of hospitals and repair shops that it covers across the country. If not, we will end up traveling long distances to find a hospital/ repair shop which our policy covers.

3. Network of hospitals and repair showrooms

Pro Tip

Remember to do this:

The Insurance Companies website will have a list of all the hospitals and repair showrooms in their network. See if the listed hospitals/ repair showrooms will be convenient for you.

Pro Tip

Remember to do this, Read all about Insurance Riders in this section.

5. Deductible

Deductible is what we pay towards the loss or damage, before the Insurance Company pays our Sum Assured. Deductibles are decided when the accident takes place. So, we should pick an Insurance Company that is open to consideration and negotiation.

6. Claim Settlement Ratio

The Claim Settlement Ratio shows the number of claims which were settled by the insurance company out of all the claims which were raised in the year. The Claim Settlement Ratio is published every year by Insurance Companies on their website.

Points to Remeber

What to look for when you compare different insurance plans and companies:
- Cost of premium
- Network of hospitals and repair showrooms
- Riders
- Deductibles
- Claim Settlement Ratio

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While these answers are subjective and represent your financial personality, it is okay to learn and evolve over time according to the needs of our present situation in life.

Do not be hard on yourself, keep learning!

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