How to select correct insurance policy: In the case of an insurance policy, cases of misselling are often heard. Miss selling means selling an insurance policy by misleading a customer. While selling an insurance policy, many agents try to sell such a policy through their lucrative talk, which is actually not right according to the interest and need of the customer. If the customer has taken the wrong policy after coming to his words, then he may suffer financial loss. Many times the wrong policy is sold even by giving half-incomplete information to the customers. For example, it takes a lot of effort to sell policies with guaranteed returns. Customers are not told that life insurance policies are not really a way of investment, but a means of financial security for themselves and their loved ones in the future.
Trying to sell a policy with guaranteed returns
Agents often try to sell a guaranteed return insurance plan to the customers. In fact, such a policy is a combination product of insurance and investment. But with a maturity of more than ten years, this plan has a return of about five per cent. Returns are available, which is nothing if adjusted for inflation. If such a policy is surrendered before three years, then no amount is returned. Even after this, if you surrender the policy, you will get very less amount is.
What is the screw of ULIP
Unit Linked Insurance Plan (ULIP) is a life insurance plan under which a company invests in mutual funds. It can give better returns but the cost of ULIP is very high. This reduces your returns. ULIPs also have a lock-in of 5 years for tax benefits. You cannot redeem the investment before this. It is also important to know that to avail tax benefits in ULIPs, your premium should not exceed 10% of the sum assured of the policy.
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Understand single premium plan also properly
Premiums can be paid in three ways for ULIPs and traditional plans. First regular payment, second through limited tenure payment and third through single premium payment plan. In a single premium pension plan, you have to pay the premium only once for the total policy term. This immediately increases your financial burden. This policy is actually sold like a tax saving fixed deposit with great returns. For a person above 45 years of age, the sum assured is just 1.1 times the premium. This cannot be a tax saving option for senior citizens. To avail tax benefits, it is necessary that the premium of the insurance policy should not exceed 10% of the sum assured.
Actually, most of the miss selling is seen in the case of such elderly people who have taken retirement. Such people get lump sum amount. But due to lack of correct information, such people sometimes get caught in lucrative things and invest their capital in such an insurance policy, which does not fulfill any of their financial objectives. Therefore, do not buy an insurance policy by relying only on the words of the policy seller. For this it is necessary that you gather information from reliable sources.
best term plan
It is also important to know that the main purpose of life insurance i.e. term plan is the best and economical plan for future financial security. But usually, less effort is made to sell it. People also understand that the premium paid in a term plan goes waste, as the amount paid as premium is not refunded in it. But in reality, the higher the amount of insurance is available in the term plan, the more premium is available in any other insurance scheme.
Consider Term Plan + SIP Option
A better strategy may be to buy a large term plan at a low premium to fulfill the objective of a secure future like insurance and regularly invest the amount saved due to low premium through SIP in a good mutual fund. to be deposited. By doing this, both the objectives will be fulfilled better with the same investment. You will also get a higher amount of insurance and you will also be able to get better returns than ULIPs or most insurance schemes.