Close

	Receiver's Name:		*
	Receiver's Email:		*
	Your Name:		*
	Your Email:
	Your Message:

Insurance Is For Protection, Not Just A Tax Deduction

How many SMS messages have your received to buy life insurance products that can help you get high returns and give you a tax deduction...you know its tax-related investment season when these messages start arriving. But, do you know whether you are buying for the right reasons? Here we give you 3 tips you must always keep in mind.

1. Insurance is primarily for protection:

   Don't buy life insurance because it gives you a tax deduction. Buy it because you need protection on your life, and as an added advantage you can get the tax benefit.

   Most people in India buy insurance for the wrong reason, and without an understanding of how much coverage they need. As a result they are either grossly over or under-insured. Calculate what are the financial obligations that your surviving family will have to bear in the unfortunate even that you are not around, and then adequate coverage for this amount.

   Click here to know how do I calculate the right amount of coverage for myself




2. Understand your ability to pay the premium:

   Insurance is a long-term contract between you (the insured) and the life insurance company. For the contract to remain valid, among other things you are usually required to pay a premium to the company. While some policies are single premium, many are policies where you have to pay an annual premium. Review your ability to make the lump sum single premium or recurring annual payments. Make yourself comfortable that you will have the cashflow to fund future premium payments.



3. Review the paperwork with a hawkeye:

   Don't let an insurance agent fill the form out for you. You are the one who is signing a contract with the insurance company, not your agent. So, make sure that you fill out the form yourself rather than just sign the form and get the agent to fill out the rest. Additionally, when you get the policy, you have a free-look period for 15 days. If you think that something is not what you signed up for, you can cancel the policy without any penalty.

No one can overcome the emotional loss of a close family member. However, insurance can help you overcome the financial loss to some extent, if you buy it with your eyes open and for the right coverage.

Comments

Thanks for your comment

    

guest said : 09/01/2010	information is very useful