IRDA bans sale of insurance products over phone

This time there's some good news for insurance products buyers. Insurance Regulatory and Development Authority of India (IRDA) made a smart move this time in favour of millions of buyers before 2-3 days.

Insurance Regulatory and Development Authority of India (IRDA) banned selling of insurance products over phone. According to Insurance Regulatory and Development Authority of India (IRDA), in last 6 months over 10% of the products sold were mis-sold. The common sales pitches used for mis-selling can be found here.

This will be a huge respite for uninformed, innocent people who were called by Tele Sales Representative of the insurance companies and were given insurance products which the buyer had no information about. I have come across many cases where the person was called in the insurance companies office with his/her spouse and they were given some gift worth 100 bucks and were sold insurance products worth 50,000 bucks. And as the Indian women are very attached to free gifts, the hubby had to buy that 50,000 premium's insurance for that non-worthy 100 bucks gift.

Another instance of mis-selling over phone was more of like a fraud. The individuals were given minute details over the phone, and that too only positive points, and were asked for credit card details. The premium amount was deducted from the credit card and then the detailed documents were sent to the consumer. As we all know, no one reads the full documents of the insurance. The problem arises when the claims are made. The insurance company denies claims on basis of many faults in the form and the loser is consumer always.

This ban will be very beneficial to the consumers and its a reason to cheer for all of us!!!

As a Tip, I would suggest all of my readers to read the documents carefully before buying any insurance product. You can always ask for the product brochure. You can call the toll-free number any time, 24 hours a day. You can ask for the help of a good financial advisor to understand the product better. I would really love to hear, if you don't invest without studying the insurance product fully. Wish you all the best and a financially independent life.

Sales Pitches used for "Mis-selling"

I had heard about mis-selling of insurance products earlier, but I was really shocked when I really experienced it. There are certain standard "sales pitches", which a life insurance advisor makes while mis-selling insurance products. Lets see these standard pitches and be aware in future that you are not a victim of mis-selling of insurance products:

1. ULIPs have free insurance
   
   If any advisor says he's giving free insurance with mutual funds, then he is probably talking of Unit Linked Insurance Plans (ULIPs). But remember always that insurance can never be free. Some mortality charge is always levied (depending on your age), even if the advisor says its free.
   
   Tip: Don't fell into trap, ask for the brochure or call customer care (toll-free numbers) to know the hidden charges.
   
   
2. No details on the expenses involved
   
   Unit Linked Insurance Plans (ULIPs) always involve high upfront charges, referred to as Policy Administration Charges, which range from 14% to 75% of the Premium Amount. Most or all of this amount is passed on to the advisor as a commission.
   
   Tip: To protect yourself from this mis-selling, always ask the advisor to give you a brochure of the product he is selling and look for the table detailing the "Premium Allocation Charge".
   
   
3. Money-back offer
   
   Some of the advisors make huge commissions on the sale of insurance products. They have their own targets and they have conventions and foreign tours to be own. To achieve their targets, they may offer you some cashback. Say you are investing 10,000 bucks and the advisor is making 2,000 bucks of commission (20%). He/She may offer you 1,000 bucks of cashback. (Believe me, I have seen advisors which offer 100% cashback, means they pay your first year premium. But then???)
   
   So, should you invest just because you are getting 1,000 bucks back? Remember, the advisor will offer cashback only in the first year and if the insurance's premium paying term is 15-20 years, you need to pay 10,000 bucks * 20 = 2,00,000 bucks. You will be trapped in a wrong product and your investments and financial planning will fail.
   
   Tip: Understand the product, call the toll-free number, clear your doubts and then go for any insurance product. Don't invest 2,00,000 bucks just to save 1,000 bucks.
   
   
4. Double your money in 3 years
   
   This is the "sales pitch" which is most popular now-a-days. What do you think, is this possible? I have an downloadable excel sheet here, which staes that if you are investing 10,000 bucks per year, then in 3 years you will invest 30,000 bucks and to double that, means to make it 60,000 bucks, you need return on investment of 51.20%. I don't feel any asset class can give such assured guaranteed return constantly. If you believe then just check your investments. The stock market's behavior right now can give you heart attack.
   
   I came across many people, who have been victim of mis-selling by other advisors and they have bought 10s of insurance products for each and every member of their house and burnt their hands in this choppy market. They were shown illustrations with return of 25-26% by their advisors. This is purely illegal.
   
   Insurance Regulatory and Development Authority of India (IRDA) only allows illustration which assumes return of 6% and 10%, which is achievable too. The moment you see illustrations other than return of 6% or 10%, they are purely assumed and illegal and the advisor is mis-selling you the insurance product.
   
   Tip: Consult your friends and financially knowledgeable people and if you know the markets well, study them well and make sure you are investing in a right insurance product. Ask the upfront charges that will be deducted as "Policy Administration Charges".
   
   
5. Pay premium for only 3 years and forget it
   
   This is the sales pitch used for mass mis-selling. Unit Linked Insurance Plans (ULIPs) have a cover continuation option, which continues the life coverage of the individual, if in any case he/she is unable to pay the premium after the initial 3 years. But stopping to pay premiums after the first 3 years will not help you either.
   
   Initially, for the first 3 years, the charges are high and the amount invested is thus less. After 3 years, the charges gets reduce to nearly 1% of the premium amount and rest gets invested. But if you stop paying premiums after first 3 years, you will not build a capital in longer term (This is for what you bought a policy). If you continue to pay premiums for full premium payment term, then you can build a capital that is nearly 10-15 times of your investment in 20-25 years.
   
   I learned from my friends that advisors even guarantee a payment of 16,00,000 bucks after 20 years if you pay 10,000 bucks for initial 3 years. That's 30,000 turned into 16,00,000 (53 times approximately). My downloadable excel sheet here shows that you need 26% increment every year to achieve that target. Ask yourself, have equities given that much return with a guarantee?
   
   Tip: Whenever you choose an insurance product, foresee your expenses and plan in a way so that you can pay premiums for a full premium payment term. Don't rush in to get every new insurance product. When you hear such "sales pitches", ask for the charges straight forward and invest wisely. Don't be "Penny Wise and Pound Foolish".
   

So this was a pretty long list of some "Sales Pitches" used for mis-sellings and my tips to avoid those. Don't be trapped into those and if you save yourself from those mis-sellings, don't forget to leave a word of thank for me.

Keep in mind while trading OPTIONS

Below are some tips to keep in mind, while trading OPTIONS:

1) 20 - 100 rule: Make sure that you will not tolerate the Loss of more than 20 % of premium money you are invested per trade (say 3 out of 10 trades=30%), and lock in 100 % profits of premium money per trade (say 7 out of 10 trades=70%)

So in the long run for every 3 losing trades you will be having the 7 winning trades.

Get out when you see a drop in 20 % of the premium money.

2) Make a simpler strategy and trade with the above rule.(You might be reading books and have arrived upon many strategies, but trade one strategy at a time. That too it should be plain simple one.)

3) Don't use more than 10 % of your account money in one trade. (As a general rule, if you have 1 lakh with for trading per trade you should not be putting more than 10K, and the rule no. 1 stands at 2K stop loss.)

4) Do a paper trade and gain experience and then starts with the real money trading.

5) Don't switch strategy often.

6) Use conservative strategies in the beginning, then once you are experienced you can take the more rewarding ones.

7) Remember the Premiums that you will be paying will get eroded with time decay. Be prepared for that.

8) Before you enter the trade make sure that you have plan like

1. What is the stop loss for the trade?
2. What is the target you set for the trade. (In general, you should set 100% but for starters they can set 50%)
3. What is the probability of reaching the target ?

9) Always remember to exit once the profit reached.

10) Always monitor your positions.

Planning your finances early

The first job for any individual marks a turning point in his life. The first paycheck acts as a gateway to new opportunities and of course, financial independence.

It could also mean preparing to shoulder responsibilities, if your family budget is in need of augmentation.

Even if you are not required to contribute, you still owe it to yourself to handle your finances with care.

Below are some of the steps, which you must take to ensure financial independence:

1. Insure yourself
The first thing that you need to look at once you get your salary is insurance — for yourself as well as your dependents. You should opt for a term life insurance cover now that you have a steady stream of income. If you buy a life insurance cover at a young age, you will have to pay lower premiums. The value of the cover can be 10 times your annual cost-to-company (CTC). Life insurance premium paid is eligible for tax deduction under Section 80 C, but protection, and not tax benefits, should be the criterion for taking such decisions.

However, there is no need to get a life insurance policy in the first year of work-life if you have no dependents. You would be better off acquiring a mediclaim with a cover of Rs 3 lakh-5 lakh. Even if your organization offers a health insurance cover, it would still be worthwhile to sign up for a standalone insurance policy. In addition, you can claim a deduction of up to Rs 15,000 under Section 80 D on health insurance premiums. You can get a health insurance cover for your parents. It entitles you to an additional tax deduction of up to Rs 15,000.

2. Avoid loans
Next, you need to guard against the temptation to borrow funds to purchase cars, bikes or consumer durables.

You should leave such decisions for the second year if not later. Consumption loans are not a good idea.

Also, if at all you have any surplus left after addressing your needs, it is advisable to avail of a home loan jointly with your parent/s.

3. Strive to save
If you are single and living by yourself with a monthly income of less than Rs 25,000, your target savings rate can be 40%; while it can be 50% for those earning Rs 25,000 to Rs 50,000.

For people with an monthly income of above Rs 50,000, the ideal savings rate would be 60%. A part of the savings could go towards building a corpus for meeting emergency needs.

Ideally, you should direct a minimum of 25% of your gross income towards investments. If you are jittery about dealing in equities, you could put small amounts of money into Unit Linked Insurance Plans (ULIPs), Public Provident Funds (PPFs) and Fixed Deposits (FDs).

While FDs can yield a return of around 10% at the moment, you should go for them only if you fall in the no-tax or low-tax brackets. PPF, which carries a return of 8% p.a, offers tax breaks under Section 80 C. Investing small sums on a regular basis , in Unit Linked Insurance Plans (ULIPs), could result in a sizable corpus over a period of time.

If you invest Rs 5,000 every month in a PPF, your kitty would swell to Rs 17.40 lakh after 15 years. The returns are certainly not comparable to those offered by equities, but it is better than letting your money lie idle in a savings account.

However, your risk-taking capacity would be high when you are in your 20s. Investing in equities — either directly or through systematic investment — could be your best bet. To start with, you need to invest 80% of your target savings in equity through the Unit Linked Insurance Plans (ULIPs).

If you stay invested with a long-term view, equities can offer you far better returns than other avenues.

Besides, investments of up to Rs 1 lakh in some equity MF schemes — equity-linked saving schemes (ELSS) — are eligible for deduction under Section 80 C, thus presenting you with the dual benefit of tax-saving as well as investment.

So, when are you starting your investment and looking forward to build a great corpus???

Honesty is the best insurance policy

On March 16, 2001, Kumar had taken a life insurance policy for himself for a sum assured of Rs 10 lakh. He had given the following answer to a question in the proposal form that asked:
“Do you consume alcohol”? Yes/No; average usage per day.
Ans: Yes, 1 peg per week.

Seven years later, Kumar died of liver cirrhosis, caused by chronic alcoholism. Because of the false statement in the proposal form, the insurance company repudiated the claim. Kumar must have been embarrassed to admit his problem of chronic alcoholism while filling up the proposal form, but little did he know that in spite of paying premiums regularly and taking a policy, he would leave his family stranded in its hour of need.

Policyholders are in danger of seeing claims on their insurance policies turned down because they fill the proposal form very carelessly or make the agent do the job (irrespective of whether they are literate or illiterate). What the proposer doesn’t realise here is that this document will be referred back to at the time of claim and a careless “yes/no” will prejudice the claim settlement. A proposal form is the foundation on which an insurance contract stands.

Insurance contracts are based on trust. Since the insurance company knows nothing and as a proposer you know everything about the risk, it is your duty to make a full disclosure of all the facts that will affect the insurer’s decision to insure you and the terms on which they insure you. A lot of times, people tend to lie about their health for fear of not getting the policy, or having to pay up a higher premium. While this may get you a policy easily; at the time of a claim, you will land in trouble. And then, you may get cynical about insurance and find yourself in agreement with someone who said, “Insurance is like marriage. You pay and pay but you never get anything back.”

Insurance agents also tend to play smart. They will prompt your answers at the time of filling a proposal form and make it sound like it’s just a formality, lest they lose out on a customer. But the law says “buyer beware.” The contract is between you and the insurance company and not between you and the agent. As a party to the contract, you are expected to maintain utmost good faith in the insurer.

An essential part of the insurance contract is the understanding that each has taken the other entirely into confidence. If there were to be any question of one withholding from the other what he needs to know, the entire transaction would be void. So you need to watch out - as mistakes can prove costly.

The insurance regulator in India has also made it mandatory for insurance policies to be issued with the proposal form duly filed in.

All too often, customers and insurers are only too happy to complete a transaction without this important document - leaving the door open for disputes on what was intended to be covered or excluded.

Some tips:

• Be honest and forthright in responding to the questions in a proposal form as any erroneous information could result in the insurer denying you coverage.
• Don’t sign on a blank incomplete proposal form. You will be held responsible once you sign on the document. You should check the correctness of the information before signing. And keep copies of the filled & signed proposal form.
• You need to bear in mind that your duty to disclose is of an ongoing nature. Many people do not realize that every renewal of an insurance policy is a new policy, i.e. a new contract requiring disclosure. Say Ravi took his first health insurance policy in 2004 from Sigma Insurance Co and for the question in the proposal form pertaining to “Whether you have any other health insurance policies in force,” he replied in the negative, which was true. But it was no longer true when the policy was renewed with the mutual consent of both parties in 2005, as Ravi had taken another health insurance policy from a different insurer. Ravi was obliged to inform Sigma Insurance Co about the new policy that he had taken because the original proposal form becomes incorporated into the renewed policy and continues to form the basis of the contract.
  

As always, the devil is in the detail, lurking in the fine print of your proposal form. So, please take some time off before signing the proposal form as some investment in time today will help avoid any heartburn later. The unexpected happens all the time… so just having an insurance policy tucked away somewhere is not enough; due diligence while filling the proposal form is of utmost importance.

3 most necessary life insurance policies

I would like to explain in details the investment and insurance options, so that I can help you in making informed decisions and you can invest in a better way and generate capital in longer term and also protect yourself from the unexpected occurrences of illnesses.

We'll review 3 most popular and most necessary life insurance policies which any individual should have in his/her insurance portfolio for a financially independent life-style.

1. Health Insurance:

First and most important is health insurance.

Hospital rooms. Doctor's Bills. Stress. Worry. Tears. Frustration.

Life seems to be over the moment one is diagnosed with a critical illness. Critical illnesses, like cancer or heart attack are extremely unpredictable and can strike anytime, anywhere.

With Health First from TATA AIG LIFE, life doesn't have to come to a standstill. Because the financial cover it offers plays a large role in contributing to your peace of mind and subsequent recovery. If you are ever diagnosed with any of the 12 Critical Illnesses, or need surgery, this special benefit provides you with a lumpsum amount.

The 12 Critical Illnesses covered are: Cancer, Stroke, Heart Attack, Chronic Renal Failure, Aorta Surgery, Heart Valve Surgery, Major Organ Transplants, Coronary Bypass Surgery, Parkinson's Disease, Paralysis, Benign Brain Tumour, Total Blindness.

Features of Health First:

1. Daily Hospitalization Benefit: Rs.250 per day for Max 90 days
2. Post Hospitalization Benefit: Rs. 125 three times within 30 days of discharge.
3. Surgical Benefit: Rs. 12,500 per unit
4. Critical Illness: Rs. 1,25,000 per unit.
5. Death Benefit: Rs. 1,000 per unit.

The Annual Premium of Health First for one unit is shown below and the total benefit of one unit is Rs. 2,50,000

Age of life assured	Male	Female
18	786	765
19	792	775
20	801	791
21	841	835
22	886	882
23	928	929
24	970	982
25	1022	1044
26	1073	1113

So, even if you go for 4 units, then you need to pay approximately just Rs. 3600 yearly, i.e. Rs. 300 per month only and you will have the coverage of Rs. 10,00,000.

For more details, please visit http://www.tata-aig-life.com/Individual/Adult/adultHealthFirst.htm

2. Unit-Linked Insurance Plans (ULIPs):

Second is an insurance with investment perspective.

If u are still young you can generate tremendous wealth if you start early.

But before I show you the real wonder, lets see what are the benefits you can have if you act right now by investing in equities:

1. Equities, even being volatile in the short term, are the best instruments for long term growth of capital.
2. Regular investment will help compounding your wealth.
3. It will help to fight Inflation.
4. It will help to plan for your financial goals.

The 2 tables below shows the effect of the inflation:

i. Effect on our Bigger Spendings:

Spendings on	Year - 1985 (Price in Rs.)	Year - 2008 (Price in Rs.)	Inflation(% per year)
Balcony Ticket	15	240	13.43%
Hotel Bill	100	1,200	11.96%
Petrol	8/litre	56/litre	9.00%
MBA Course	40,000	8,00,000	14.59%

ii. Effect on our Daily Spendings:

Product	Year - 1985 (Price in Rs.)	Year - 2008 (Price in Rs.)
Toothpaste	5	50
Masala Dosa	5	25
1 Kg of Sugar	4	22
1 Kg of Salt	2	10
1 Kg of Onions	3	18
1Litre Milk	4	24

Compared to inflation above the increment in the salary was negligible, as shown below:

Post	Year - 1985 (Salary in Rs./month)	Year - 2008 (Salary in Rs./month)	Increment(% per annum)
Accountant	5,000	24,000	7.39%
Manager	8,000	40,000	7.59%

Investing in Equity is Risky, but not investing in Equity could be Riskier...

Growth is a NEED today, and not an option.

The best ULIP in the industry at present is TATA AIG LIFE's INVEST ASSURE FLEXI...

I have an excel file where you can input the Yearly Premium to pay and Rate Of Interest you assume to get, and you will get the result for the next 40 years...

You can download the excel file from this location:

Download File

Just edit the 2 cells, with black background and red text:

1. Premium, which is 25000 by default
2. ROI, which is 20% by default.

You will not believe, but the power of compounding is great. Compound interest is the 8th wonder of the world.

Investing just Rs.25000/year, for 40 years, will give you Rs. 13,43,36,909!!!

Believe me 13 crores against an investment of just 10 lakhs.

Delays could severely affect your wealth creation goals.

Follow the simple rule below:

Start Early + Invest Regularly = Create Wealth

Start Early:

The example below shows the benefit of starting early:

	You	Your Friend
Current Age (years):	25	25
Start (age):	Today	At age 30
Invest for (years):	5	20
Amount invested per year (Rs.):	18,000	18,000
Total Invested Amount (Rs.):	90,000	3,60,000
Redemption at age (years):	60	60
Amount accumulated at 60 years, assuming 20% return (Rs.):	2,19,83,800	1,68,73,411

As you can see your friend, even after investing for 20 long years could not beat your investment of 5 years, simply because he started late. Only 5 years late. I hope you don't want to be late.

Invest Regularly:

Even small amounts invested regularly can grow substantially.

Buying MORE units @ low prices & buying FEWER units @ high prices helps AVERAGE out your purchase price.

Rs.1,500/- invested every month for 20 years = 18,000 * 20 = Rs. 3,60,000

Fund Value at 20% return per annum = Rs. 30,76,680

A whooping Rs.30 lacs, 10 times the invested amount!!! So, you might be eager to invest today, right now. Won't you?

For more details, please visit http://www.tata-aig-life.com/Individual/Adult/adultInvestAssure Flexi.htm

3. Term Life Insurance:

Third is term life insurance, which you must take if you are not going for a ULIP.

If you have lesser savings at present you can start with a term life insurance, and then when your savings increase you can go for ULIPs. Because, when something wrong happens to you (I hope it doesn't, but this is the reality of this world), all your dependents will have hard times living, as you are the bread-earner. If they receive a lumpsum amount, they could plan and live on their-self. Even if you have too much money and you have bought property (land) all across, if you don't have insurance, the value of that property will decrease drastically, once you leave this world. Because all the buyers will know that your family needs money and they need to sell the property or anything to leave their life.

By the way Term Life Insurance is the best form of life insurance and its the real insurance. Others such as ULIPs, or Money-Back Plans or Endowment plans are modified form of insurance with an investment perspective.

For term life insurance you need to go for RAKSHA from TATA AIG LIFE, as it has the lowest charges. You can compare with any other company.

This is premium table of RAKSHA for sum assured Rs. 10,00,000:

Age of life assured	Policy term 10 year	Policy term 15 year	Policy term 20 year	Policy term 25 year
18	1720	1780	1830	1900
19	1750	1780	1870	1940
20	1770	1830	1900	1980
21	1790	1850	1930	2020
22	1810	1870	1960	2060
23	1820	1900	2000	2110
24	1840	1920	2040	2150
25	1860	1960	2080	2210
26	1880	1990	2130	2270

For more details, please visit: http://www.tata-aig-life.com/Individual/Adult/adultRaksha.htm

Plus there are many more products, which can give you guaranteed returns, which can assure your retirement plans, which can plan for your children's education or marriage, which can plan for a holiday abroad, which can protect you for the life-time, which can give you monthly returns after your retirement. But those can be discussed on specific needs. We need time to discuss those things. If you have any other requirements you can always forward your query.

Why choose TATA AIG LIFE INSURANCE COMPANY:

Tata AIG Life is the one of the most trusted Life Insurance Companies in India. Since its inception in 2001, it has grown by leaps and bounds. Today, Tata AIG Life is present in 24 states and 156 cities across the country. It covers over 22 life insurance products and has over 250 product combinations. It is hardly surprising that Tata AIG Life has been voted No 1 in customer satisfaction* among life insurance companies in India.

* Source: Consumer Voice Survey 2006

Why choose ME as your LIFE INSURANCE ADVISOR:

You must have come across the frauds and false sales made by the advisors of life insurance companies, in the newspapers or might have experienced yourself too. They sell wrong products with wrong targets, and wrong promises. Do you know why? Because its their job. They get commission for that, and they are solely dependent no. of policies sold. They don't have any other source of income. So to fulfill the needs of themselves and their family, they need to sell life insurance policies anyhow. They try all the combinations and give false commitments and fly away with their commissions. This is not the case with me. I am a Software Engineer, I have my monthly salaries credited in my bank account regularly. I work as a Life Insurance Advisor, so that I never get cheated by the frauds all around us. I protect my friends, family members and relatives too. I help them to take informed decisions, and never give false targets or false promises. If I sell a policy or don't, me and my family don't have to worry about the money. So, I make trusty and true sales and build a long-term good relationship. So its on you to choose an advisor who thinks of your profits or who thinks of his/her own profits. Hope you take a smart decision.

For brochures of the life insurance products discussed above or other products you have heard off, or any queries regarding investments contact me as soon as possible.

Even if you don't buy insurances from me, feel free to discuss your requirements.

Any queries will be highly appreciated. I will feel you have learnt something from this.

For any other detail, you can have a look at the official website of the company: http://www.tata-aig-life.com/

I also want you to look once at the newly launched website of the company: http://www.assuremydreams.com/

Life Insurance Advisor - Do You Really Need One?

When you look at all the life insurance companies online, signing up for a policy seems as simple as typing in some information and clicking "enter." But are you sure your policy covers all of your assets and your family's needs? Are you going to remember to review your coverage every few years? If you aren't absolutely confident in what you need or have a full understanding of your policy, going to a life insurance advisor is a better route for you.

How Do I Find A Life Insurance Advisor?

If you are already doing research on life insurance, you probably have come across some various companies. If they are reputable, they will recommend that you see a life insurance advisor, and they may even be able to recommend some. Friends, family members, and even co-workers are great resources for finding a trustworthy advisor. You can also explore various professional organizations that certify agents or offer professional memberships. They may have a referral service.

Since you should make sure that your agent has an insurance based education, looking via certification agencies can be beneficial. And since belonging to professional associations like the IRDA(Insurance Regulatory and Development Authority) shows that an agent adheres to a certain code of ethics, these organizations can point you in the right direction.

Tips For Choosing A Life Insurance Company

More than 15 insurance companies offer hundreds of life insurance products in INDIA.

Choosing the right company and right product from this bewildering choice is challenging. Fortunately, there are some common sense guidelines that will help you narrow the field to a more manageable selection of companies and products.

Looking at the Cost

The life insurance business is highly competitive, but the industry tries to avoid price competition whenever possible. Instead, companies attempt to make their products sufficiently different from their competitors so that price is less of a factor in product selection.

However, there are ways you can keep your premium rates to a minimum without affecting the quality of your cover.

• Consider Term Life Insurance - Term Life Insurance is the cheapest form of life cover available and premiums are very competitive.
• Shop around - in particular, if you know exactly what type of cover you require and don’t need advice, you can reduce your premiums by asking for a discount. This reduces your monthly payments below the premium you would pay by applying direct to the insurance company.
• Stop smoking - premium rates for smokers are 30-40% higher than for non-smokers. If you can or are thinking of quitting you will save hundreds on your premiums over the term of the policy.
• Only pay for the cover you need - If you are looking for term insurance and critical illness, you can make big savings by buying a combined policy. These only pay out one lump sum rather than the two that separate policies would pay, if you suffer a critical illness and then die.
  

Obviously, the cost of monthly premiums is going to be a major factor in your choice of insurer but, it should not be your only consideration.

Product Quality

There can be major differences between life insurance policies so it is important that you compare like with like and check the small print. This is particularly important if you are including extra’s such as Critical Illness Cover. Always read the Key Facts document carefully and look for some of the following benefits:

• Are the premiums Guaranteed? This means the premiums are guaranteed to remain the same throughout the term of your policy. This is opposed to `Non-Guaranteed´ premiums which, as the name suggests, are Non-Guaranteed usually every 5 years and can increase/decrease dramatically.
• Check that the policy has terminal illness benefit included. This is a valuable extra which is now included in most Term Life Insurance policies for free and will pay the life insurance amount early if you suffer a terminal illness.
• Can the policy be written in trust? This will avoid any delay in the money going to your dependants and the risk of inheritance tax being charged on the benefit.
• Can waiver of premium benefit be included in your plan. This is a valuable extra which, if you become too ill to work for a number of months, will ensure your cover continues without you having to pay the premiums.
• A valuable feature of some policies is counselling for your family if you die?

Claims History

No matter how good the policy it will all be for nothing if your insurer is difficult or obstructive if you should have to make a claim.The industry pays out over lakhs a day in pension and life insurance claims and all insurers have procedures in place to process claims on their policies.

Before taking out a policy it is advisable to contact your prospective insurer and ask about their claims history. Note their willingness to provide this information and the attitude promoted by their response. Do they look for reasons to pay claims or excuses to avoid them?

Financial Strength

When selecting or evaluating a life insurance company, a logical place to begin is by reviewing the ratings given by major insurance company rating services. In a rating, the rating company or agency expresses its opinion of the life insurance companies financial condition.

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