Insurance is something that most people think of only when faced with a loss, injury or accident. It is moments like these when you are in maximum need of financial assistance, and this is when your insurance company needs to come through and give you the financial support that you require. Today, life insurance has become a necessity, especially for the primary earning member of the family. The benefits of buying a life insurance policy are myriad and go beyond simply protecting the policyholder’s family in tough times. Insurance policies can act as a financial cushion, become a saving tool and provide mental peace. When it comes to buying an insurance policy, an individual is usually spoilt for choice. There are a plethora of life insurance policies that provide multiple benefits to the policy holder. This means that you definitely need to do your homework to ensure that the insurance coverage that you buy is able to protect your family’s health, assets and financial well-being. Since all options offered are not alike, one must carefully look and analyse a few things related to the policy before subscribing to one.

Look For The Following In A Life Insurance Policy

1. Inclusions

When buying a life insurance policy, it is imperative to understand what is covered by your selected insurance policy – and what is not covered – before you purchase the cover. Inclusions are the policy provisions that are covered by your life insurance policy. These inclusions make the life insurance policy worth buying. Simply put, these are the events that are insured and their occurrence will result in some compensation for you. However, the inclusions would specify under what circumstances the death benefits will be paid to the nominee. It is necessary to understand what is covered under your policy to be able to utilize it better. Some insurers make their policies such that some additional coverages are taken as inclusion. These could include accidental coverage, critical illness coverage, monthly income for fixed numbers of years post receipt of lumpsum payment etc.

2. Exclusions

An exclusion is a policy provision that eliminates coverage for some type of risk. Simply put they are events and conditions that are not covered by the insurance policy. Exclusions narrow the scope of coverage provided by the insurance company and must be carefully looked at, before subscribing to the policy. It is Important to understand the circumstance and events that are not covered under your insurance policy to be better prepared for all eventualities. Some common exclusions are pre-existing medical conditions, death due to self-inflicted injuries, lifestyle diseases and suicides.

3. Restrictions

Restrictions are policy provisions that attach certain conditions to the life insurance policies. They must be understood before buying a policy as being unaware of these restrictions can result in an unhealthy claim experience and can even turn costly for the policyholder. Some common restrictions are minimum entry age, maximum entry age, maximum coverage ceasing age, minimum and maximum term assurance rider, sum assured etc. Knowing the restrictions will help you buy the policy that is best placed to meet your specific requirements.

4. Claim Settlement Ratio

The claim settlement ratio is an indicator of how many and how much claims a life insurance company settled in any financial year. Claim settlement is calculated as the total number of claims settled against the total number of claims received in a particular time period. A higher and consistently good-claim settlement ratio indicates that in the event of a claim, the insurance company follows quick and robust practices to ensure that worthy claims are settled in an expedient manner. This is crucial while buying a life insurance policy since the main benefit of the policy is the claim that the nominee will receive in case the insured event occurs.

5. Revival Period

A lapse means a life insurance policy is no longer an active contract. An insurance policy will lapse when premium payments are not made on time and the grace period has also been crossed. However, insurance companies provide an option to reactivate the lapsed policy, within a specific period of time post the grace period by paying the unpaid premium and a certain amount of interest on the unpaid amount. This is the revival period. The period is currently two years, and policy holders must be aware of any changes made in regulations related to it.

6. Add-ons Riders

Add-on rider is an attachment, amendment, or endorsement made in a life insurance policy that gives the policyholder supplementary coverage. Riders strengthen an insurance policy by providing multiple additional benefits, apart from the core offering of a death benefit.

Supplementary coverage differs for all policies and you must ensure availability of additional coverage along with the policy to protect the future of your family. Some of the most common riders are accidental death benefit rider, accidental disability benefit rider, critical illness benefit rider, waiver of premium rider, income benefit rider, etc.

7. Conversion Feature

The conversion feature allows you to convert your term life policy into another plan such as a whole life or an endowment plan, albeit with certain rules and restrictions that must be well understood by the policyholder. The biggest advantage of the conversion feature is that it allows you to convert your term policy into a whole life ore endowment policy without having to undergo a medical examination. This can be particularly beneficial when you experience a decline in health after taking your initial term policy

When purchasing a life insurance policy, it is important to fully understand all the terms and conditions related to the policy. You can also seek the help of an advisor who can guide you and point out all the important metrics that demand your attention. Simply by being a little judicious and paying attention to detail, you can ensure your family’s financial security.

The author is the Co-Founder of Turtlemint, an InsurTech Company