Buying insurance for the first time? Key points you should consider | The Financial Express

Buying insurance for the first time? Key points you should consider

Before opting for an insurance cover, you should know its importance and how much cover you should take as per your requirement.

Buying insurance for the first time? Key points you should consider
Insurance is not just an instrument to save tax.

Insurance is not just an instrument to save tax. If chosen properly, an insurance policy can provide you adequate financial cover against the loss that you or your family may suffer due to any unfortunate happening of an insurable event.

So, before opting for an insurance cover, you should know its importance and how much cover you should take as per your requirement.

Milan Ganatra, Founder & CEO, 1Silverbullet, talks on the types of insurance and the points that you should keep in mind when buying insurance for the first time:

Insurance is typically divided into two segments – general insurance and life insurance.

Life insurance

As the name suggests, life insurance is meant to cover the policyholder’s life. In the event of the policy holder’s demise within the policy’s term, the insurance company will pay an assured sum to the policy’s nominees. The most common life insurance policies in India are whole life insurance, term life insurance, endowment plans, Unit-Linked Insurance Plans (ULIP), child plans, and pension plans.

General insurance

In a nutshell, this segment covers all non-life insurance assets, including health, home, motor, fire, and even travel.

The points that should be kept in mind when buying insurance for the first time –

“Buying insurance for the first time can seem like a daunting task because of the number of options available in the market,” said Ganatra.

Here are some factors that one must keep in mind when making a decision:

Understand your needs

Start with assessing why you need insurance, whether it is to provide for your family in case of your untimely demise or to ensure appropriate compensation in case of a fire to your business premises. Are you looking for insurance for a specific term or for life? These decisions will influence the type and term of your insurance.

Aligning your budget

Today, one can buy highly affordable insurance at a very low premium. One can also pick the coverage according to one’s needs. For instance, you can omit passenger coverage when buying motor vehicle insurance if you typically travel alone.

Safeguard your health

The first priority must be health insurance. It ensures that you have the ability to seek appropriate healthcare in case of an emergency. It can impact your ability to recover, your future earnings, and will protect your savings.

Research and buy from a reputed company

When buying insurance, it’s always advisable to check the company’s claims settlement ratio. It is the percentage of life insurance claims that an insurance company has settled in a year against the total number of claims in that year, plus pending claims from the year before. The insurance market offers many options, from both the public and private sectors. Shop around and compare different options for coverage and premiums. Remember to always buy from a reputed company.

“Buying insurance has become considerably easier today, thanks to digitisation. Buyers can research and buy a policy in a matter of minutes. For insurance companies, these benefits have been manifold, from increasing their reach through easy onboarding to improving claims processing. Tools like chatbots have brought efficiency in client interactions, while AI-based tools like machine learning are now instrumental in claims processing. With emerging technologies such as telematics further improving data access and collation, digitalisation will continue to drive growth opportunities in the industry,” said Ganatra.

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First published on: 20-04-2022 at 07:19:37 pm
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