While it is undeniably crucial to secure a life insurance plan, it is equally imperative to comprehend correctly the terms of the policy document. Yet one cannot blame the prospective insured for apparently ignoring the terms of the policy, given the sheer technicality and twisty understatements involved none of which can always be intelligible to the policyholder.
However, one can always make sense of the stuff once the keywords are identified. In other words, the prospective insured should look at certain basic inclusions in order to understand the policy document. The following are the most elementary aspects to look for in a policy document.
Essentially, the declaration page of the policy document is where the insurance policy and the coverage aspects are summarily mentioned. The declaration page might also contain the schedule of benefits. Fundamentally, the declaration page consists of the name of the insurance policy, term of the plan, policy number, policy issue date, benefit amount, risk factors, attached riders and the beneficiary. All these aspects must be checked one by one in order to avoid confusion later. As mentioned at the outset, the declaration page is essentially the summary of the entire life insurance policy. Consequently, this is the ideal place to check and cross check the aspects of the plan.
First and foremost, it is important to keep in mind that the concerned policyholder should also verify his or her personal details such as name, address, phone number etc. The details of the policy name and the term of the policy should also be verified. Indeed, it turns to be rather strenuous if the insured should discover erroneous inclusions later. Therefore, before perusing the core technical aspects of the insurance policy, the personal details should be verified.
The most essential policy terms such as death benefit, risk, policy loans, accelerated benefits etc. should be reviewed by the policyholder. Most importantly, the concerned insured should make it a point to assess the risk contours associated with the terms of the plan. Also, it is equally crucial to verify the aspects and corollaries of the insurance policy loans.
The aspect of premiums seems to cause the biggest confusion among investors. With the sheer proliferation of sundry schemes and premium corollaries, one naturally finds oneself in the haze. First and foremost, it is imperative to ensure whether the terms of the premium would remain the same throughout the course of the plan, of course considering that no change is effected by the policyholder. Specifically speaking, certain companies have varied premium rules for disability and smoking issues. Such considerations should be factored in while reviewing the policy document. If ones has a smoking history, one should declare to the company upon which the policy terms might be tweaked in accordance with the changes in the premium.
While reviewing the contents of the policy, it is essential to pore over the details and consequences of the riders available under the plan. For instance, the accidental death benefit rider and the critical illness rider; for those who have just declared their smoking habits, such riders may have to be tweaked depending on the coordinates of the risk. Apart from that, the rules vary from one company to another. Consequently, the norms differ for the non smoker and the smoker. It is the liability of the customer to thoroughly check the rider terms and conditions before continuing with the plan.
It is important to keep in mind that not all kinds of death are covered by the insurance plan. So the policyholder should verify just what kinds of disease are covered by the plan. For instance, deaths due to terrorist activities are strictly not covered by any insurance plan. Also, whether such casualties would be covered under purely humanitarian conditions also needs to be verified from the policy dossiers. Apart from that, death due to natural disasters is not always covered under the terms of a policy. The simple reason is that such disasters inflict casualties on a great magnitude. Having been ignorant of the exactitudes of the plan, most insurance holders tend to assume a remonstrative stance afterwards. Therefore, the policyholder should check for the apparent exclusions and not find oneself at grips with such crises later.
Naturally, the range of benefits provided by any insurance plan is magnanimous, to say the least. However, it is the duty of the policyholder to assess the benefits to find out whether the merits are at all congruent with his or her long term financial goals. Keywords to thoroughly check include the likes of basic sum assured, premium amount etc. Apart from that, it is equally vital to review the flexibility of the policy before deciding to buy it. So far as the benefits are concerned, one would do well to assess their implications in terms of market influence and core affordability. Generally speaking, any insurance plan must at times count on the vagaries of the market. Consequently, the prospective insured should groom up for such impediments beforehand. Everything is there in the policy document itself.
Each insurance outlet has its own payment terms. The policyholder should check the tenure of the premium payment and also the mode of payment. Insurance contracts might at times baffle the customer with rather simplified statements. However, it is imperative to accept that life insurance is best when considered in long term aspects. Additionally, the implications for the mode of payment tend to vary from one mode to another. Having decided upon the mode, one should look for its corollaries in the policy document.
The aforementioned aspects are some of the key things to consider while assessing the contents of the policy document. At the same time, it is equally important to keep in mind that policy review is not to be done once and for all. Essentially, the policyholder is always subject to monumental changes in life. Accordingly, the policy document should be returned to in order to better understand the consequences of the change.