What Are the Basic Pointers to Consider When Buying a General Insurance Policy?

What Are the Basic Pointers to Consider When Buying a General Insurance Policy?

Insurance in India is broadly divided in two types – life and general insurance. Death of an individual is covered by life insurance whereas all other risks are covered under a general insurance policy. Different general insurance plans are available for various perils concerning health, motor, property and more. Selecting a general insurance policy requires careful analysis of various factors. This article describes five such points that you should consider when buying a general insurance cover. Let’s have a look –

#1 Reason to buy

The foremost consideration to keep in mind when selecting a policy among the different types of general insurance plan is the purpose. Not knowing why you need one is a major mistake and must be avoided. Since the purpose of an insurance policy to mitigate financial losses, you need to be sure what are benefits of buying one. In addition, some general insurance plans like a health insurance policy even offers tax benefits and thus you need to be clear of the reason you are buying.

#2 Coverage of the policy

Once you have defined the purpose of purchasing a general insurance plan, you need to be clear of what coverage you want in your policy. When you select a policy, you need to know a wider coverage comes with a hefty price tag while on the other hand, pocket friendly policies generally have limited scope. So, when you select a policy you need to balance both the coverage as well as the price it carries. Since it is a multifaceted decision, an insurance calculator can aid you in this process.

#3 Comparing the policies

After deciding on the coverage that you need to, next step is compare the various plans before you buy one. There are various options in the market for any general insurance policy you buy. Similar to comparing any product before selecting, you also need to compare the diverse insurance products that are on offer. Comparison helps decide which offering meets your requirements and the price at which it is offered. An insurance calculator is a handy tool that helps in effective comparison of the pros and cons of each general insurance policy vis-à-vis its competitors.

#4 Selecting appropriate term of insurance

General insurance plans are available for varying terms. Some are available for shorter tenures while some have extended tenure. Depending on the risk for the underlying insured product, you must select the tenure of the policy. In addition, premium is that amount that you need to pay to keep coverage active for each tenure and thus you need to select a policy with adequate tenure.

#5 Claim settlement ratio

Claim settlement ratio is the percentage of claims settled when compared to total claims received. For you to select a particular general insurance company and its offering, the claim settlement ratio helps to decide which insurer has a higher chance of accepting your claim and thus must be opted for.

These are some vital considerations that help in selecting a general insurance policy. Always remember them, be it for a health, motor, commercial or any other insurance plan. Lastly, do not forget that insurance is the subject matter of solicitation. For more details on benefits, exclusions, limitations, terms and conditions, please read sales brochure/policy wording carefully before concluding a sale.