4 Ways for Making Insurance Policies Easier to Read
Why do people face difficulties in reading insurance policies? There is a very high rate of illiteracy in India. And, also if someone is not illiterate they may have a problem in understanding the insurance policy terms. Selling insurance in India is not an easy task! Even today, insurance is a sold-out product and even if you recommend the best plan to the customer according to their needs, it may not sell for many reasons! So today we are going to discuss about 4 Ways for Making Insurance Policies Easier to Read.
What are the main problems of customer buying insurance policies?
- They already have some opinions about insurance.
- They do not feel confident to invest their hard-earned money in your suggested plan.
- People are not understanding your suggested sales proposal.
- They are not able to understand the language of insurance policies.
When a youth starts a job, he gives priority to buying insurance. However, to buy insurance in the right way, you must understand what is needed and exactly what amount of insurance you should buy.
If you go to the literal meaning of insurance, it means a system in which a company charges a fixed premium and in return guarantees compensation in the event of a particular loss.
In the case of life insurance, it can be understood in more simple terms an agreement in which a company takes premium and pays compensation to your nominee in case of your death. Keep in mind that what most agents are selling is not insurance.
You may agree that reading insurance policy is very tough because the term mostly writes in a very complicated manner and the language of term written in the policy documents is also available in only one language mostly in English, but they should be written in multiple languages.
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Read about simple 4 ways for Making Insurance Policies Easier to Read:
Here we are trying to make the reading terms of insurance policies easy for everyone:
This change has happened in the Insurance Amendment Act: Till now the nominee was meant to be a power of the sum of insurance, but after the reform in the Insurance Amendment Act 2015, a category has been created separately, which was named as the Beneficial nominee. It clearly states that there can be a spouse, parents, or children as a nominee.
If a person makes a beneficial nominee while buying insurance, both the nominee and the beneficial nominee will be entitled to the claim according to the new clause.
No one else can claim after a beneficial nominee: A husband can make his wife or child a beneficial nominee while purchasing insurance. Once someone’s name is registered as a beneficial nominee, no one else can claim this amount. The name of the beneficial nominee can also be changed during the continuation of the policy. This means that if a divorce occurs, the spouse can change the name of the beneficiary nominee in the insurance policy.
Keep this in mind while taking the policy: If the process of a life insurance policy is in progress and the money is yet to be paid in it, apart from the beneficial nominee, any other relative of the policyholder can also claim it. To avoid such a situation, the married woman can buy the policy under section 6 of the property act. In this, a person’s wife and children get more rights.
This is the law: According to Section 6 of the Married Woman Properties Act 1874, a wife and children are entitled to the facility of insurance, etc. after the death of one married person.
A nominee should be made according to the Married Woman Properties Act while applying for insurance.
What amount of insurance policies should you buy?
The common understanding is that you should take at least 10 times coverage of current annual earnings. This amount of policy can be changed according to the income of other family members, your property, house, etc.
If you are unable to understand the terms and why 10 times the annual income should be covered, then let us understand this with an example:
The question that if you are not living then how much money will your family need for the necessary expenses? When you find a solution to this question, the amount that will come in front of you will be about 10 times your annual income.
How to be sure about terms and other things of the insurance policies and particular insurance companies?
What is right for the large population of the country can also work for you. Many people know how much premium they are paying to the insurance company. They do not know that if an accident happens to them, then how much will their family get in return?
The life insurance policy has been made in such a way that the standard of success is not how much the customer is insured, but the standard is how much he is paying the premium.
They are expensive and are being sold as investment products. Insurance coverage among them is very low and it is kept according to the requirement of the regulator only.
The insurance regulator’s job is to protect the interest of the customers. Unfortunately, in the insurance business, the regulator measures its success by how much amount of money was collected from customers as premiums. It should be how much insurance was given to the customers.
The annual report of the insurance regulator IRDA does not say how much amount people were insured. The regulator simply dismisses the insurance density. Insurance density includes a premium to income, the country’s growth rate (GDP) ratio, etc.
IRDA figures do not tell us how much the price of insurance policies has been given.
They tell how much money was collected from people as a premium.
- The question is, when a customer dies, how much money does his family get?
- How many customers know about this cover?
- This information is either not available, or it is kept confidential.
This attitude of the insurance regulator is also seen in the person who sells you insurance. How agents try to influence you is a long story. While purchasing insurance, just keep in mind that the coverage in it is 10 times your annual income. If you get this then you are buying the right insurance product.
Also, Read – Top 10 International Health Insurance Companies
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