Purchasing an insurance policy is not an issue of getting the cheapest premium or building a huge name in the market. The real worth of a policy resides in its features and its finer details, which decide how well it will protect you in case of an unforeseen turn of events. An understanding of these key features is important in terms of balance-the coverage, benefits, and peace of mind.
Below are the important features to check before you buy an insurance policy:
Coverage Amount
What's inside?
The coverage amount (also known as the sum insured) is the total sum that your insurer agrees to pay in case of a claim.
Why It Matters:
- A low coverage amount may lead to being underinsured in the time of need.
- At least 10-15 times of annual income will suffice for life insurance.
- For health insurance, it is based on your city, hospital costs, and number of family members.
Opt for the highest affordable coverage at all times to provide immediate financial protection to you and your family.
Premium Payment Methods
Your premium is the cost paid to keep your policy active. Monthly, quarterly, semi-annually, or annually can all be selected.
What to Know:
- Annual payments generally tend to cost less than those made monthly.
- Premiums usually increase with age or if there are additional riders.
- Usually, limited pay or single pay options are made available by life insurance for ease of use.
- Don’t go for the lowest premium; it’s more value versus benefits.
Facility Cashless
A cashless treatment facility is given in case of hospitalization in an empanelled hospital for many health insurance providers. This literally means that out-of-pocket expenses for hospitalization have been avoided, and the insurer pays the hospital directly.
What to Check:
- Make sure that the insurer has a fairly big network of hospitals, especially near your home or workplace.
- Know how to initiate a cashless claim-pre-authorization, documentation, emergency procedures.
- Emergency contact and health card should be updated at all times.
Before you even need to use it, know which hospitals are covered under your insurance’s network.
Claim Settlement Ratio (CSR)
The claim settlement ratio indicates how often a particular insurer successfully settles claims. The higher the ratio, the more likely your claim will be processed smoothly and in time.
What to Look For:
- Insurers with a CSR above 95% are to be chosen for reliability.
- See how fast, on an average, they settle claims.
- Read customer ratings and reports from the IRDAI for transparency.
Even the best policy is quite practically useless if the insurer does not settle claims efficiently.
Waiting Period
Not all benefits of insurance commence immediately. There is a waiting period until coverages begin.
Common Waiting Periods:
- Health insurance becomes effective 30 days after the initial contract date, and pre-existing illnesses typically requires coverage from 1-2 years.
- Maternity and critical illness: they carry a longer waiting period before coverage will apply.
- Life insurance: coverage usually starts immediately except in the case of suicide exclusion which may apply for the first year.
If you have a pre-existing condition or immediate health needs, look for policies that have shorter waiting periods.
Exclusions
Every policy has exclusions (situations not covered by the plan or conditions excluded from it). Common Exclusions Include:
- Pre-existing diseases (within a certain period)
- Cosmetic or experimental treatments
- Injuries due to substance abuse or intentional harm
- Losses due to war or self-inflicted acts
Before Buying: Go through the policy brochure and fine print carefully to understand what is not covered. This will prevent unpleasant surprises later on.
Riders and Add-Ons
Riders (or add-ons) are additional features that complement your base policy with extra coverage at a low additional charge.
Popular Riders:
- Critical Illness Rider: A lump sum of money paid for diseases like cancer or heart attack.
- Accidental Death/Disability Rider: Provides extra compensation for loss due to accident.
- Hospital Cash Rider: Daily cash await hospitalization.
Opt for riders that are most appropriate for your lifestyle and risk profile as opposed to only those given as default ones.
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