Globally, it’s a well-acknowledged fact that Indian consumers are smart - marketers call them value seekers.

They understand the product’s functionality, durability, features, performance rating, warranty, fit, colour and customisation.

But the same can, unfortunately, not be said when they are buying insurance products.

The average annual premium for a life insurance policy is Rs 20,000 for a term averaging around 12 years. But when it comes to buying a policy the typical reaction is: “Where should I sign on the proposal form, is all I want to know”.

The harsh realisation occurs few years later when the policyholder understands that he had originally signed for a regular premium product, which is now lapsed.

Casually signing on a proposal form, the policy holder mistakes a regular premium product for a single premium plan. This is one of the root causes for increasing dissatisfaction, grievances, high surrender rates and policy lapses.

Here are the ten most important things you need to keep in mind before signing the life insurance proposal form.

Analyse and ensure that the plan meets your insurance needs and long-term financial goals.

Check the plan type. Is it market-linked or traditional? If it is market linked, be aware of the risk associated with it.

Be clear if it is a regular or single premium plan.

Understand the risk factors, terms and conditions of the plan. Read the sales brochure carefully. It’s far simpler to understand it than the electronic gadgets with which we spend enormous effort and time.

Confirm the premium payment term and premium amount, which later you may find it higher or lower in context of likely changing income and goals through the policy term.

Check the benefit illustration

Confirm the tenure of the plan. Make sure it is appropriate.

Understand the benefits available under the plan – before and at maturity.

Check the lock-in period and applicable surrender charges

Provide true and complete information in the proposal form.

Insurance customers will have to demand more and raise the delivery standards, which they have successfully done in other product and service categories. We need to be not just big savers, but smart savers too.

(The author is Head- Brand and Cross Sell at SBI Life)

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