5 points to note when buying life insurance

Oct 09, 2017

While most individuals have grasped the basic idea concerning insurance, the complexities tend to put them off. But, an insurance plan can be quite advantageous if the policyholder discerns the details.

PolicyBazaar tells you what to keep in mind.

Loyalty Addition

If the maturity period of your policy is completed, you are given an incentive as the loyalty addition to keep your policy active during the whole tenure of the plan. Based on the performance of the market, the loyalty additions’ rates are finalised by the insurer and they are to encourage the insured to stay devoted for a longer duration of time.

What you need to know:

  • The loyalty addition is different for different insurers.
  • Usually, payment of 5% of the annual premium is made, based on the policy’s maturity period.
  • Loyalty additions are offered chiefly with endowment policies and Unit Linked Insurance Plans, or ULIPs.

Free Look Period

Life insurance policies offer what is called a free look period, provided by the Insurance Regulatory and Development Authority of India, or IRDA. You may purchase a policy but then realise that its terms and conditions or benefits are not in sync with your expectations. So can you terminate the policy? Yes. In such a situation, get hold of the agent or insurer and to do so. He can cancel the policy and receive the refund on the amount paid.

What you need to know:

  • A free-look period generally extends to 15-20 days.
  • The policy holder must make a written communication about this matter to the insurer.
  • The policy must not be less than 3 years in tenure

Reduction of Premium

If you are a teetotaler and non-smoker, you can avail of a lower premium.

Before selling an insurance plan, the company will execute a procedure known as ‘underwriting’, under this an assessment of the health of the policy holder. There are various things, which are checked under the premium reduction process such as the chances of you to make claim for a big amount, your current health status, etc. Depending on these observations, the insurer provides a lower premium.

What you need to know:

  • Usually, the rates of the premium for the preferred non-smokers and the non-alcoholic drinkers are the minimum
  • However, the above are not in isolation, the holder of the policy must also possess a healthy family background.


It is not mandatory that the life insurance plan will offer a full coverage to the holder of the policy in particular situations such as critical illness, or accidental disability etc. In these cases, riders have a significant role to play. Riders are usually add-on benefits, which come together with the basic plans of life insurance.

What you need to know:

  • To avail the riders’ benefits, the holder of the policy is required to make an additional payment in addition to the basic premium.

Online Buying

  • Buying a life insurance plan online is seamless and convenient and can be done at your own time and pace.
  • Compare insurance quotes online from the wide range of options to pick the suitable one.
  • A guideline is to look for the highest coverage at the least premium, though other factors too come into play.
  • Online plan costs lesser as compared to the purchase of the insurance policy offline. Furthermore, the individual receives step-by-step facilitation via messages, calls, chats etc.
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