One of the most important aspects of Personal Financial Planning is to make sure that our most important family goals are fulfilled even when we are not there.

This can be achieved only by safeguarding our Financial Planning by taking optimum Insurance cover through a Term Insurance Policy. What is Term Insurance & how much we must be insured will be discussed in our next post.

Importance of insurance, the kind of policy we should opt for & how much we must be insured, after understanding these 3 important points related to insurance we can surely treat our-self as a financially aware person and can easily go ahead taking a term insurance policy of required cover. But even the smartest of the persons may do a blunder while applying for an insurance policy that finally leads to rejection of our claim leaving our family in troubles.

Getting an insurance policy doesn’t necessarily mean that you will get your claim until and unless you follow some guidelines truly.

1. 1.  Fill Your Insurance Application Form Yourself

      You should not be in so much hurry that the work you do; doesn’t produce the desired results. Check your form after it’s filled up, as only you know about you and your family history related to health and other things. You think the Insurance agent is doing a favor by filling your form on your behalf while it’s not, as any error or omission may lead to trouble in future. Any wrong information is treated by the insurance company as a breach of trust and the agreement for insurance becomes null and void. So next time… Don’t just sign the form and forget it.

   2. Check The Policy Document As Soon As You Get It

      We must recheck the copy of our application form with the details in our Policy Document, which we receive from the Insurance Company. If you find any discrepancy in personal details or related to other disclosures contact your advisor or insurance company and get it rectified immediately. Insurance company gives you 15 day free look-in period after you receive the Policy Document for rectifying all these problems & as an easy exit option from the policy.

   3. Don’t Hide Any Facts

      Majority of Insurance buyers prefer to hide their medical history while filling the application form for insurance. They do this as they feel their premium might increase or insurance company may deny them an insurance cover after the disclosure. They might be right but upto a certain extent as it is also true that after hiding the facts their chances of getting a claim reduces significantly and will create a hassle for their family when you are not there. What is the use of paying a lesser premium when we know the chances of our claim getting rejected are very high?

      If you consume alcohol or tobacco explain it in detail also don’t hide anything like your family health history, age, income, profession or any other insurance cover you have etc. We should disclose everything that could increase the risk of the insurance company and should disclose it willfully.

      Remember after you die, you will not be there to explain the insurance company why you forgot to mention the facts in the application form. 

Insurance is a contract based on ‘Utmost Good Faith’

1. Don’t Ignore Medical Tests…It’s A Proof

   We have a tendency to ask our insurance advisor while applying for insurance policy “Medical Karwana Padega Kya?” We must stop treating medical test as a trouble while buying an insurance policy; rather we must welcome it, it reduces chances of claim rejection. It removes all doubts of insurer regarding any pre-existing diseases and put the case strongly in our favor.

2. Policy Lapse

   Don’t ever let your policy lapse, by not paying premium on time. However, insurance companies gives us grace period for paying the premium after the premium due date. We get claim only if the policy is in force i.e we have not crossed the deadline of grace period or have renewed the policy within grace period. But, it is advised to pay the premium well in time rather than waiting for the due date.

Also to ensure hassle free award of insurance claim to desired nominee , Do not forget to update the nominee name under insurance policy. For ex. when we are unmarried we tend to nominate our parents or siblings for all our financial matters, however after marriage, wife becomes main beneficiary but we forget to update that under insurance policy. This increases the required paperwork & formalities for the claimant, if his or her name is not mentioned as a nominee under the policy. So always keep your nominee name updated.

I hope you would have understood ‘what should be our approach while buying an insurance policy’. Don’t fall in the trap of hiding details to keep premium low or for easily getting an Insurance Policy, it can work in somebody else favor (may be your agent), but surely will not work for you.