How to buy insurance that is right for you
Why Do We Need General Insurance?
Anything that exists in the world, be it health or possession, is bound to undergo change including depreciation, damage or loss. Health and possessions need to be maintained and protected against natural and man-made disasters. With mounting expenses and limited earnings, one cannot afford to take into stride, all the exigencies. It is here, that general insurance comes into picture.
Types of General Insurance
Any insurance coverage, apart from life insurance, comes under general insurance. As the name suggests motor, home, health and travel cover the related exigency. Other types of general insurance includes crop, fire, personal accident, business, rural and NRI insurance.
Skewed Focus - Taking Over Giving
The insurance regulator (IRDA) itself measures the success on how much premium the company earns from its customers rather than how much coverage has been dispensed to the insured. The focus is not on what insurance companies pay to the customers but how much money customers pay to these companies in way of premiums.
Investment and Insurance Go Hand In Glove
Insurance agents are tempted to sell policies with low returns and high premiums. They resort to guile and polite mannerism to convince you to buy inappropriate products for which they get high commissions. The premiums are high because emphasis is laid more on the investment aspect, rather than pure insurance.
How Much Insurance Do I Need
We buy wrong insurance cover because we fail to understand how much we need, and over what period of time. This gives enough leverage to the selling agent to take you for a ride. Emboldened by the commission mode of payment, the agents are propelled to sell inappropriate insurance policies.
Hit the Nail On The Head
You can set things straight by following few steps such as:
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Assessing Your Risks
Know which insurance you need. Health insurance should always be at the pinnacle of your list. For example if you’re travelling to work but have no plans of a holiday or work trip, you should choose personal cover and not travel insurance. If you have your own vehicle then motor insurance becomes vital.
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Knowing the Exact Coverage
Identify your risk’s costs. For example, while buying motor insurance cover, examine costs of maintenance, repairs, and cost of new car if the present one is destroyed and so on. Once the risk costs are pinned, map your required coverage.
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Comparing Different Products Across Various Insurers
So once you know the insurance type and coverage, invest some time in comparing premiums and add-ons across various insurance companies. You should take into consideration period along with the coverage. Read in-between the lines to avoid falling in a trap.
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Not Compromising On Coverage Scope Just Because Premium Is High
There could be instances where premiums could be high for comparative coverage. Peruse the add-ons and riders available. For example, a home insurance premium might cover not only the house and belongings, but also your costs for staying at alternative location while the house gets renovated.
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