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Questions You Must Ask Before Buying Life Insurance


The right advice makes all the difference

Buying Life insurance is one of the most important decisions of our lives.

We believe that you must be aware of everything that you need to know about your life insurance policies. As a prospect who wants to buy a life insurance policy, you must be clear about the policy details, its features and benefits before you actually decide to buy a life insurance policy.

Here are 5 questions that you MUST ask a life insurance agent before buying a life insurance policy

Is the Agent Advisor qualified or authorized to suggest me a life insurance solution?

As a first step, you should ask your insurance agent to provide his/her Agent License Number, and details pertaining to it such as, when was it issued and when is it expiring. This will give you an idea of how many years of experience he or she has in offering life insurance advice and solutions. You should also check whether he or she is a full-time or part-time agent.

All insurance agents have a reporting manager on the rolls of an insurance company. Write down and keep record of the contact details of the reporting manager and the branch office out of which the agent advisor operates.

What are my financial needs – current and future?

The first thing you should ensure is that the agent advisor is a problem-solver; one who can understand and fulfill your and your family's financial security and long-term wealth creation needs.

If your agent does not ask probing questions and provide you life insurance solutions based on the needs derived from your answers, you may need to look for another agent.

The Agent Advisor, before recommending a life insurance plan, should gauge your needs by carefully assessing the gap between your assets and liabilities, your annual income and standard of living, your spending habits and your long term objectives and goals.

The agent should do a need analysis exercise to understand and suggest what kind of plan suits your need and accordingly recommend you a term, whole life, endowment, health or a Unit Linked Plan.

What is the product that will suit my needs the best and what are its benefits?

Once the agent does a need-based analysis for you and suggests suitable life insurance product(s) that will cater to your specific needs, you should ask him or her 3 key things:

The agent should be able to spell these out very clearly and in writing.

Additional details to be asked for include payment paying tenure, mode of payment, minimum years of lock-in period (as applicable), flexibility in partial cash value withdrawal, etc. In the case of health insurance, the network of hospitals covered under the plan should be shared with by the agent advisor.

What are the differentiators of this product?

Always ask the differentiating factors, comparing the agent's product offering with other similar life insurance products offered in the market. This will support his or her claim of suggesting the best product solution. Doing so will also be a check on his industry knowledge and product awareness.

Moreover, life insurance companies are known to offer a wide range of life insurance products. The agent needs to have a thorough knowledge of all the life insurance products offered by the company. Moreover, he or she should be informed about the competitor's products so as to provide unbiased and meaningful recommendations, regardless of how much he or she stands to gain by way of commissions.

One should also check with the agent advisor on the flexibility offered by the various product riders that may be offered along with a life insurance product, as the riders come at a comparatively low cost while enhancing the life cover component of a life insurance plan.

Additional details

Always ask your agent to provide signed benefit illustrations of the returns promised.

Under the Insurance Regulatory and Development Authority (IRDA) rules, an agent cannot show you benefit illustrations with more than an optimistic estimate of 10% and a conservative estimate of 6%.

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Points that you should clarify with your agent after buying the policy.

Ideally, the agent should answer all the queries a policyholder may have before he or she actually buys the policy.

However, life insurance is a long-term contract and therefore it becomes even more important both from the policyholder and the company's perspectives to service the policy well.

After the policyholder receives his/her policy pack, he /she must go through the same in detail and check whether all the features of the product/policy have been mentioned as were promised to him/ her during the solicitation.

In case of any discrepancy, there is a 15-day free look period within which a policyholder can choose to return the policy and there is refund of the premium paid post the deduction of applicable charges.

What to do if you think a product has been mis-sold to you?

As stipulated by Insurance Regulatory and Development Authority (IRDA), a life insurance company provides a free look period of 15 days to a policyholder, during which a policyholder can review the policy and upon not being satisfied basis the benefits and features of the product, can choose to return the policy and there is refund of the premium paid post the deduction of applicable charges.

At Max Life Insurance, we have a dedicated Grievance Redressal Cell to examine customer issues and provide an impartial resolution in case the policyholder has a concern.

IRDA has also set-up various Ombudsmen offices across the country, which take up policyholder complaints.

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