Buying right insurance policy is your responsibility, not your agents'

Life insurance agents are likely to sell unsuitable products and hiding information was possibly an important part of their sales pitch, said Business Standard reportciting a study conducted by the Harvard Business School.

This means the customer has to do his homework while dealing with life insurance agents. The first step towards this is to find out if you need life insurance at all. Yes, there are certain circumstances where an individual does not need life insurance. Next step is to know what kind of insurance you need. Do you need a term plan or would a whole life policy work for you. Once you decide on the type of insurance you need to buy, you need to know the kind of cover you need. Ideally, eight to 10 times of your annual income should be the minimum amount of life insurance cover you need.

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You also have to keep in mind the liabilities you owe like home loan and the like. Another important parameter to look into is the company you buy your insurance from. This means finding out about the claim settlement process, claim settlement ratio and the like. Then comes the premium amount which you can afford to pay. A lower premium does not necessarily mean a better policy. Finally know the terms and conditions of the policy.

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You might need to do a little bit of hard work to understand the policy wordings, but it is always worth it. If you have any queries about the policy ensure that you get your doubts clarified from the insurance agent. If you think he’s fibbing, go online and check the company’s website. Most insurance companies, these days have enough insurance finance literacy content on their websites. Read the full Business Standard story here.

The truth is that all insurance agents are not there to mis-sell, but it definitely happens. As the Havard Business School study finds out, a number of life insurance agents make sale pitch without giving away important policy information. You could read this Firstpost report to know how to spot when an insurance agent is lying to you..