How to get the best life insurance policy

In an online chat with Get Ahead readers on october 29, Ashish Vohra, Senior Director and Chief Distribution Officer with Max Life Insurance answered queries on life insurance.

Here is the unedited chat transcript.

hardik: 5 factors to identify a good insurance company that will not create hassles while claiming insurance?

Ashish Vohra: Life insurance is a business of settling claims. While choosing the right company for you, please consider -- Financial stability of the company (solvency margin, capital), claims record -- time taken to settle claims, number of claims paid, outstanding claims ratio, claims guarantee and service standards. It is your responsibility to make complete disclosures while filling the proposal form.

Rishabh Mathur: [SKB] What is the ideal life insurance amount for a person earning Rs 70k per month and just four members?

Ashish Vohra: Rule of the thumb is 8-10 times of your annual income to protect your current lifestyle. However, it is best to consult an agent advisor who will analyse your needs based on your current life stage, your long-term goals, household expenditure, assets and liabilities and will give you exact life cover you require now. Please review your life cover requirement at regular intervals.

john: How do I know if I have got the best life insurance policy?

Ashish Vohra: If the policy you have bought meets your requirement for which you bought the policy, it is good for you. Don't judge a life insurance policy on the basis short term returns. In case you did not buy the policy after a thorough need analysis, it would be a good idea to get it done through a professional agent advisor and then judge the suitability of your policy for any of your life stage need.

Harpal Singh: i want to take online term insurance. please suggest me which is the best plan

Ashish Vohra: There are various plans available in the market. One way to choose is purely on the basis of price. However, we would suggest you to consider other parameters such as financial stability of the company, claims settlement record and processes, customer service standards / experience and the ease of buying process.

Navin Shah: How Long To Plan For Retirement?

Ashish Vohra: The life expectancy in India has gone up to over 70 years which means on an average a person lives for more than a decade after completing work life. Life exectancy of women is almost 5 years more than men. So while planning for post retirement income please consider minimum 15-20 years of payout. To achieve this goal one must start early, in fact right from the day one starts working.

Dinkar Dosanjh: How can buying a term insurance help a salaried person?

Ashish Vohra: Term insurance is an income replacement solution in case of unfortunate incidence of untimely death or permanent disability which will stop the regular flow of income. Irrespective of profession, one must buy term insurance as the first step in financial planning.

anil: What are the benefits of buying term insurance over other traditional insuance policies?

Ashish Vohra: Term insurance provides pure protection which means that the benefit occurs only in case of untimely death or permanent disability of the life assured. Whereas savings cum protection plans offer maturity benefit for life stage needs alongwith death benefit. Term plans provide higher death cover at lower premium.

mustafa: How about annuity policiies Would you prefere an annuity or moneybaclk policy over term insurance?

Ashish Vohra: Annuity or money back policies are meant to provide for your life stage needs such as retirement planning, children education and marriage whereas term plan provides protection against unfortunate incidence of death or permanent disability. Both these products serve different set of needs.

rajat: Is ULIP better than term life insurance? What are teh pros and cons fo both?

Ashish Vohra: ULIPs are market linked savings cum protection plans meant to provide for your life stage needs such as retirement planning, children education and marriage with some risk cover whereas term plan provides protection against unfortunate incidence of death or permanent disability. Both these products serve different set of needs.

Jignesh Kaisth: What is the ideal life insurance amount for a person earning Rs 70k per month and just four members?

Ashish Vohra: Rule of the thumb is 8-10 times of your annual income to protect your current lifestyle. However, it is best to consult an agent advisor who will analyse your needs based on your current life stage, your long-term goals, household expenditure, assets and liabilities and will give you exact life cover you require now. Please review your life cover requirement at regular intervals.

dinesh: What factors should I keep in mind before, during and after buying life insurance?

Ashish Vohra: 1. Is the Agent Advisor qualified or authorised to suggest a financial solution to you?2. What are my financial needs -- current and future? 3. What is the product that will suit my need the best and what are its features? 4. What are the differentiators of this product? 5. Benefit illustrations with more than an optimistic estimate of 10 per cent and a conservative estimate of 6 per cent.