Insurance Tips: Millions of people in India buy life insurance policies, but due to a lack of proper information, the same policy becomes a source of trouble for the family when needed. At the time of the claim, due to a lack of documents, incorrect information, or technical reasons, the family had to face numerous difficulties. Aditya Gupta, who has about 30 years of experience in the insurance sector, has shed light on some serious and often overlooked mistakes related to LIC policies, which every policyholder needs to be aware of.
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Mistakes Made While Choosing a Nominee Can Lead to Legal Problems
When taking out an insurance policy, most people fill in the nominee’s name, but they don’t understand how important this decision is. According to the rules, more than one nominee can be appointed, and it can also be decided how much each nominee will receive. For example, half the amount can be given to the wife and the remaining portion to the parents. Despite this, people do not update their nominees after major life events such as marriage, childbirth, or divorce. As a result, the family faces legal disputes at the time of the claim.
Why Surrendering a Policy When You Need Money Can Be Costly
When faced with a financial crisis, many policyholders surrender their insurance policies first. According to Aditya Gupta, this is the most damaging decision. As soon as the policy is surrendered, the life insurance cover ends, and sometimes even less money is returned than the premiums paid. Conversely, if a loan is taken against the same policy, life protection remains intact, and a large portion of the surrender value can be obtained. In the event of a claim, the loan amount is deducted, and the remaining amount is given to the family, thus ensuring their financial security.
Signing a Blank Form is Playing with Your Future
Blindly trusting the agent while taking out insurance can often prove costly. According to Gupta, signing a blank form is like taking a risk with your family’s future. If the agent hides information related to your illness or lifestyle to sell the policy, the company may reject the claim in the future. Therefore, it is essential to fill out the policy form yourself, provide complete information about your health and habits, and carefully review everything before submitting.
Ignoring Term Insurance is a Big Mistake
In India, insurance is often viewed from an investment perspective. People ask how much money they will get back in the end. This mindset leads to term insurance being given low priority. However, experts believe that a term plan is the cheapest and most essential form of protection. This policy provides a large life cover at a low premium, ensuring that the family’s standard of living remains secure even in the absence of the earning member. Savings or return-oriented plans come after this.
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Lack of Awareness about Insurance is a Serious Problem
In a country with a population of approximately 1.4 billion, having only 330 million insurance policies is a cause for concern. Aditya Gupta believes that insurance should be viewed not just as a financial product but as a social necessity. Basic insurance education at the school level, clear information about insurance options on government digital platforms, and conveying the right message to the general public are the needs of the hour.